Richard Melson

December 2005

Atlanta Fed Circular Letters

http://www.frbatlanta.org/bank_info/circ_router.cfm

Circular Letters

Circular letters announce news, policy, and guidance from the Board of Governors.

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2005

November 22, 2005

Minutes of Federal Open Market Committee, November 1, 2005

The Federal Reserve Board and the Federal Open Market Committee on Tuesday released the minutes of the Committee meeting held on November 1, 2005. The minutes for each regularly scheduled meeting of the Committee are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The summary description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.
Press Release (links off-site)

November 21, 2005

Final Rule Governing Remotely Created Checks

The Board of Governors of the Federal Reserve System approved amendments to its Regulation CC that define "remotely created checks" and create transfer and presentment warranties to shift liability for an unauthorized remotely created check to the institution where it is first deposited. In order to help reduce the potential for fraud, the amendments to Regulation CC create transfer and presentment warranties under which any bank that transfers or presents a remotely created check would warrant that the check is authorized by the person on whose account the check is drawn. The warranties would apply only to banks and would ultimately shift liability for losses attributable to an unauthorized remotely created check to the depositary bank. These amendments would not affect the rights of checking account customers, as they are not liable for unauthorized checks drawn on their accounts. The amendments are effective on July 1, 2006.
Press Release (links off-site)

November 17, 2005

Agencies Issue Final Rules on Post-Employment Restrictions for Senior Examiners

The federal bank and thrift regulatory agencies today issued final rules to implement a special post-employment restriction on certain senior examiners employed by an agency or Federal Reserve Bank, as required by the Intelligence Reform and Terrorism Prevention Act of 2004.

Under the final rules, if an examiner serves as the senior examiner for a depository institution or depository institution holding company for two or more months during the examiner’s final twelve months of employment with an agency or Federal Reserve Bank, the examiner may not knowingly accept compensation as an employee, officer, director, or consultant from that institution or holding company, or from certain related entities.

The final rules are effective on December 17, 2005.
Press Release (links off-site)

November 17, 2005

Agencies Finalize FACT Act Rule on Medical Information

The federal bank, thrift, and credit union regulatory agencies today issued final rules under the Fair Credit Reporting Act (FCRA) that create exceptions to the statutory prohibition against obtaining or using medical information in connection with credit eligibility determinations. The final rules, which are substantially identical to the interim final rules issued by the agencies in June 2005, also address the sharing of medically related information among affiliates. The effective date for these final rules is April 1, 2006.
Press Release (links off-site)

November 01, 2005

FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4 percent.

Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. The cumulative rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis point increase in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)

October 24, 2005

Statement by Chairman Alan Greenspan on the appointment of Ben Bernanke

"The President has made a distinguished appointment in Ben Bernanke. Ben comes with superb academic credentials and important insights into the ways our economy functions. I have no doubt that he will be a credit to the nation as Chairman of the Federal Reserve Board."
Press Release (links off-site)

October 20, 2005

Federal Banking Agencies Request Comment on Suggested Domestic Risk-Based Capital Modifications

The federal banking agencies have published an interagency advance notice of proposed rulemaking (ANPR) regarding potential revisions to the existing risk-based capital framework. These changes would apply to banks, bank holding companies, and savings associations. The ANPR document discusses various modifications to the U.S. risk-based capital standards including:

  • Increasing the number of risk weight categories to which credit exposures may be assigned;

  • Expanding the use of external credit ratings as an indicator of credit risk for externally-rated exposures;

  • Expanding the range of collateral and guarantors that may qualify an exposure for lower risk weights;

  • Using loan-to-value ratios, credit assessments, and other broad measures of credit risk for assigning risk-weights to residential mortgages;

  • Modifying the credit conversion factor for various commitments, including those with an original maturity of under one year;

  • Requiring that certain loans 90 days or more past due or in a non-accrual status be assigned to a higher risk weight category;

  • Modifying the risk-based capital requirements for certain commercial real estate exposures;

  • Increasing the risk sensitivity of capital requirements for other types of retail, multifamily, small business, and commercial exposures; and

  • Assessing a risk-based capital charge to reflect the risks in securitizations with early amortization provisions that are backed by revolving retail exposures.

Comments must be received on or before January 18, 2006.
Press Release (links off-site)

October 06, 2005

Waiver of Appraisal Standards for Institutions Affected by Hurricanes Katrina and Rita

The Federal Reserve Board announced its approval of an order waiving its appraisal requirements for three years for regulated financial institutions affected by Hurricanes Katrina and Rita. This action was coordinated with the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration, collectively referred to as "the agencies."

The waiver covers transactions involving real estate located in certain Alabama, Mississippi, and Texas counties and Louisiana parishes that have been designated by the Federal Emergency Management Agency (FEMA) as qualifying for "Individual and Public Assistance (all categories)" and "Individual and Public Assistance (Categories A and B)" as a result of Hurricanes Katrina and Rita.

To qualify for the waiver, a financial institution needs to document that: (1) the transaction involves real property located in the designated disaster areas; (2) the property involved was directly affected by the major disaster or the transaction would facilitate recovery from the disaster(s); (3) there is a binding commitment to fund the transaction that is made within three years after the date the major disaster was declared; and (4) the value of the real property supports the institution’s decision to enter into the transaction.
Press Release (links off-site)

October 06, 2005

Advanced Notice of Proposed Rulemaking, Risk Based Capital Standards

The Federal Reserve Board has decided to request public comment on proposed revisions to the U.S. risk-based capital standards for banking organizations. These current standards are based upon the 1988 Basel Capital Accord, also known as Basel I.

The proposed revisions should more closely align risk-based capital requirements with the risk inherent in various exposures and could mitigate competitive inequalities that may arise as new capital rules, known as Basel II, are implemented for the most complex internationally active banking organizations.

The modifications that the Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision are considering would apply to banks, bank holding companies, and savings associations. They will be set forth in an advanced notice of proposed rulemaking to be published shortly in the Federal Register. Comment is requested within ninety days of publication.
Press Release (links off-site)

October 04, 2005

2006 Reserve Requirements

The Federal Reserve Board announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2006. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective September 2006.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit reports of their deposits and other reservable liabilities.

For reserve requirements in 2006, the first $7.8 million of net transaction accounts (up from $7.0 million in 2005), will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $7.8 million up to and including $48.3 million (up from $47.6 million in 2005). A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $48.3 million.

For depository institutions that report weekly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the fourteen-day reserve computation period that begins Tuesday, November 22, 2005 and the corresponding fourteen-day reserve maintenance period that begins Thursday, December 22, 2005.

For depository institutions that report quarterly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the seven-day reserve computation period that begins Tuesday, December 20, 2005, and the corresponding seven-day reserve maintenance period that begins Thursday, January 19, 2006.

The Board also announced increases in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports.
Press Release (links off-site)

September 28, 2005

Orders Exempting Bank Transfer Agents Affected by Hurricane Katrina

The federal banking agencies announced the issuance of orders granting emergency relief to bank transfer agents affected by Hurricane Katrina. The orders cover national banks, state member banks, state nonmember banks, bank holding companies, and bank subsidiaries. The relief applies retroactively for the period beginning August 29, 2005 through October 17, 2005.

Transfer agents maintain records related to the issuance and transfer of securities and provide operational assistance in the sale and transfer of ownership of securities. These agents also may disburse dividends and send corporate information, including proxies, to holders of securities. The storm and its aftermath have resulted in a lack of communications, facilities, and available staff, that could hamper the efforts of transfer agents to access securities, records, and funds, and to process securities transactions.

To address compliance issues caused by Hurricane Katrina and its aftermath, the orders conditionally exempt banks, bank holding companies, and bank subsidiaries acting as transfer agents from compliance with Section 17A of the Securities Exchange Act of 1934. These orders, which are being issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, complement an order issued by the Securities and Exchange Commission on September 15, 2005, that exempts transfer agents under the SEC's jurisdiction from the requirements of Section 17A of the Securities Exchange Act of 1934. Any transfer agents or other persons requiring additional assistance are encouraged to contact staff at the agencies for individual relief or interpretive guidance.
Press Release (links off-site)

September 20, 2005

FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-3/4 percent.

Output appeared poised to continue growing at a good pace before the tragic toll of Hurricane Katrina. The widespread devastation in the Gulf region, the associated dislocation of economic activity, and the boost to energy prices imply that spending, production, and employment will be set back in the near term. In addition to elevating premiums for some energy products, the disruption to the production and refining infrastructure may add to energy price volatility.

While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee's view that they do not pose a more persistent threat. Rather, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Anthony M. Santomero; and Gary H. Stern. Voting against was Mark W. Olson, who preferred no change in the federal funds rate target at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Chicago, Minneapolis, and Kansas City.
Press Release (links off-site)

September 16, 2005

Supervisory practices for financial institutions and borrowers affected by Hurricane Katrina

The Federal Reserve Board encouraged banking organizations to work with borrowers and other customers in communities affected by Hurricane Katrina. Additionally, the Board reminded banking organizations that regulatory flexibility is available to facilitate recovery in areas affected by this disaster.
Press Release (links off-site)

September 09, 2005

Change in Tentative FOMC Meeting Schedule for 2006

The Federal Open Market Committee on Friday announced a change in its tentative meeting schedule for 2006.

The Committee plans to hold its first scheduled meeting of the year on Tuesday, January 31. It had previously planned to meet for two days: January 31 and February 1. This schedule change avoids a meeting that spans the terms of two Chairmen.

In keeping with past practice, Chairman Greenspan plans to attend this meeting.
2005 Monetary policy (links off-site)

September 01, 2005

Assistance for Displaced Customers

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision (the agencies), and the Conference of State Bank Supervisors are asking insured depository institutions to consider all reasonable and prudent steps to assist customers’ and credit union members’ cash and financial needs in areas affected by Hurricane Katrina. The agencies are working with state regulatory agencies, financial industry trade groups, and affected financial institutions to identify customer needs and monitor institutions’ restoration of services.

The agencies remind the public that deposit insurance is in full force and that money in FDIC- or NCUA-insured accounts is protected by federal deposit insurance.

The agencies encourage financial institutions to assist affected institutions and consider all reasonable and prudent actions that could help meet the critical financial needs of their customers and their communities. To the extent consistent with safe and sound banking practices, such actions may include:

  • Waiving ATM fees for customers and non-customers

  • Increasing ATM daily cash withdrawal limits

  • Easing restrictions on cashing out-of-state and non-customer checks

  • Waiving overdraft fees as a result of paycheck interruption

  • Waiving early withdrawal penalties on time deposits

  • Waiving availability restrictions on insurance checks

  • Allowing loan customers to defer or skip some payments

  • Waiving late fees for credit card and other loan balances due to interruption of mail and/or billing statements or the customer’s inability to access funds

  • Easing credit card limits and credit terms for new loans

  • Delaying delinquency notices to the credit bureaus

Press Release (links off-site)

August 09, 2005

FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)

August 08, 2005

BSA/AML Webcast

The federal banking and thrift agencies, along with the Financial Crimes Enforcement Network (FinCEN), announced registration details for a live webcast of the Bank Secrecy Act/Anti-Money Laundering Examination Manual outreach event in New York on August 22.

The webcast is open to all parties interested in BSA/AML compliance issues, but registration is required. The outreach event will be held from 9 a.m. to noon EDT and will be available for on-demand viewing for three months following the presentation.

The event is part of a series of briefings for the banking industry and field examiners on the BSA/AML Examination Manual. The host organizations are the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, and FinCEN. Also participating in these outreach events are state banking agencies, Office of Foreign Assets Control, banking organizations, and banking trade associations.

To register for the webcast go to: www.ffiec.gov.

July 27, 2005

Board Launches Online Financial Education Project with USA Today

The Federal Reserve Board on Tuesday launched a new online project with USA Today that teaches middle school and high school students about economics and personal finances by challenging them to construct a newspaper front page.

Students are provided with instructions and a template of the front page of The Fed Today. Over four weeks, they are expected to consult the Federal Reserve’s recently redesigned education web site—FederalReserveEducation.org—for information needed to complete all of the elements of the page, including headlines, photos, captions, graphs and statistics. The project helps teachers meet national and state academic content standards for high school economics and personal finance courses.

It may be found at: http://www.usatoday.com/educate/federalreserve/index_new2.html

(links off-site)

July 18, 2005

Bank Secrecy Act/Anti-Money Laundering Outreach Events

The Federal banking and thrift agencies, along with the Financial Crimes Enforcement Network (FinCEN), announced registration details for the upcoming outreach events related to the Bank Secrecy Act/Anti-Money Laundering Examination Manual that was released on June 30. The events include:

  • Three nationwide conference calls to be held August 2–4, 2005; and

  • Five regional half-day outreach meetings, including a simulcast of one of the meetings via the Internet.

These meetings will be held in San Francisco, Dallas, Chicago, New York, and Miami. Banking organizations are encouraged to participate in these voluntary sessions. The content of these events is similar, and that should be factored into a banking organization’s decision to participate in the sessions. During these events, the BSA/AML Examination Manual will be discussed and examination expectations will be provided. There will also be an opportunity to provide feedback, ask questions, and address implementation issues.

Participating in the outreach sessions will be the Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), the Office of Foreign Assets Control (OFAC), and FinCEN.

The BSA/AML Examination Manual emphasizes a banking organization’s responsibility to establish and implement risk-based policies, procedures, and processes to comply with the BSA and safeguard its operations from money laundering and terrorist financing.
Press Release (links off-site)

June 30, 2005

FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-1/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Although energy prices have risen further, the expansion remains firm and labor market conditions continue to improve gradually. Pressures on inflation have stayed elevated, but longer-term inflation expectations remain well contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)

June 28, 2005

Federal Reserve Banks Announce Changes to Cash Infrastructure

Minneapolis, Minn., June 28, 2005–The Federal Reserve Banks today announced changes to cash services that are intended to improve operating effectiveness by providing cash services at some locations using different distribution methods.

The Reserve Banks plan in the next six to twelve months to switch from branch-based cash services to cash depots in Birmingham, Ala.; Oklahoma City, Okla.; and Portland, Ore. These changes are part of a broader effort to update the Federal Reserve’s infrastructure for processing currency.

A cash depot is an alternative market presence for Federal Reserve cash services. With a cash depot, the Federal Reserve contracts with a third party—usually an armored carrier—that acts as a secure collection point for Federal Reserve currency deposits from the region’s depository institutions. The depot also distributes currency orders that depository institutions have placed with the Reserve Bank. The work of counting deposits and preparing orders is done by a Federal Reserve office in another city. The Federal Reserve pays for the transportation between the Reserve Bank office and the depot operator. The operator follows strict procedures developed by the Federal Reserve.

The Birmingham cash depot will be serviced by the Federal Reserve Bank of Atlanta’s head office, the Oklahoma City cash depot will be serviced by the Federal Reserve Bank of Dallas’ head office, and the Portland cash depot will be serviced by the Federal Reserve Bank of San Francisco’s Seattle office. Approximately 50 cash employees work at the Birmingham, Oklahoma City, and Portland branches combined, but the number that will be affected by these changes is undetermined at this time. The Reserve Banks will offer a variety of programs to staff that are affected by these decisions, including separation packages, extended medical coverage and career transition assistance.

The Federal Reserve will continue its evaluation of cash services and plans to announce further changes as recommendations are approved, including the possibility of serving new markets.
Press Release (links off-site)

June 15, 2005

Nominations for Consumer Advisory Committee

On June 15, 2005 the Federal Reserve Board announced that it is seeking nominations for appointments to its Consumer Advisory Council.

The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks advice. The group meets in Washington, D.C., three times a year.

Ten new members will be appointed to serve three-year terms beginning in January 2006.
Press Release (links off-site)

May 18, 2005

Gramlich Resignation

On May 18, 2005 Edward M. Gramlich submitted his resignation as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2005.

Gramlich, who has been a member of the Board since November 5, 1997, submitted his letter of resignation to President Bush. In view of his impending departure and in keeping with Federal Open Market Committee practice, he will not attend the August 9 meeting of the FOMC.

"Ned has contributed powerfully to the work of the Board and of the FOMC for nearly eight years," said Federal Reserve Board Chairman Alan Greenspan. "Our deliberations have been enriched by his keen insights, his good humor and his lively mind."

Gramlich is resigning to pursue several teaching and research interests. He will become the Richard A. Musgrave Collegiate Professor in the Gerald R. Ford School of Public Policy at the University of Michigan, teaching in that program and in the new Michigan in Washington Program. He will also hold a part-time appointment as Senior Fellow at the Urban Institute.

Press Release (links off-site)

May 03, 2005

FOMC Statement

(Note: Corrects previous release to add sentence in second paragraph, which was dropped inadvertently.)

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually. Pressures on inflation have picked up in recent months and pricing power is more evident. Longer-term inflation expectations remain well contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)

March 23, 2005

Interagency Guidance Regarding Security Breaches

The federal bank and thrift regulatory agencies have jointly issued Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice. The guidance interprets the agencies' customer information security standards and states that financial institutions should implement a response program to address security breaches involving customer information. The response program should include procedures to notify customers about incidents of unauthorized access to customer information that could result in substantial harm or inconvenience to the customer.

Under the guidance, a financial institution should notify its primary federal regulator of a security breach involving sensitive customer information, whether or not the institution notifies its customers.
Press Release (links off-site)

March 22, 2005

FOMC Statement

On March 22, 2005 The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-3/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output evidently continues to grow at a solid pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 3-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco.
Press Release (links off-site)

February 28, 2005

Definitive Municipal Securities

On February 28, 2005 the Federal Reserve Board approved the Federal Reserve Banks’ proposal to stop providing services to depository institutions for the collection and processing of definitive municipal securities. The Reserve Banks will stop accepting deposits of bonds and coupons on September 30, 2005, and will complete the withdrawal from the noncash collection service on December 30, 2005.

Definitive municipal securities are registered or bearer bonds that have been issued by state and local governments with interest coupons in certificated, or physical, form. Municipal bond and coupon volume has been declining since the passage of the Tax Equity and Fiscal Responsibility Act of 1982, which effectively eliminated the issuance of municipal bearer bonds. The noncash collection service is provided centrally by the Jacksonville Branch of the Federal Reserve Bank of Atlanta and represented less than 0.2 percent of the Reserve Banks’ total priced financial services costs in 2004.

The withdrawal from this service is prompted by the declining volume of definitive municipal securities, the Reserve Banks’ expected underrecovery of costs for providing the service in future years, and the availability of reasonable private-sector alternatives. With the exit of the Reserve Banks, depository institution customers of the noncash collection service could instead use a private-sector service provider, such as the Depository Trust Company or a correspondent bank, to collect their definitive municipal bonds and coupons or could present these items for payment directly to the paying agent.
Press Release (links off-site)

February 18, 2005

Guidance on Overdraft Protection Programs

The federal bank and credit union regulatory agencies today announced final joint guidance to assist insured depository institutions in the disclosure and administration of overdraft protection programs.

Depository institutions may offer overdraft protection programs to transaction account customers as an alternative to traditional ways of covering overdrafts. In response to concerns about the marketing, disclosure, and implementation of these programs, the agencies published for comment proposed interagency guidance on overdraft protection programs in June 2004. The final joint guidance responds to comments received by consumer and community groups, individual consumers, depository institutions, trade associations, vendors offering overdraft protection products, other industry representatives, and state agencies.

The final joint guidance contains three primary sections: Safety and Soundness Considerations; Legal Risks; and Best Practices. The safety and soundness discussion seeks to ensure that financial institutions offering overdraft protection programs adopt adequate policies and procedures to address credit, operational, and other associated risks.
Press Release(links off-site)

February 02, 2005

FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Inflation and longer-term inflation expectations remain well contained.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)

November 22, 2005
Minutes of Federal Open Market Committee, November 1, 2005
The Federal Reserve Board and the Federal Open Market Committee on Tuesday released the minutes of the Committee meeting held on November 1, 2005.

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FRB Atlanta Circular Letter

AtlantaFed@frbatlanta.org

Tue, Nov 22, 2005