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Federal Reserve Board Invites Public Comment On A Proposal To Automate Non-Merger-Related Adjustments To Member Banks’ Subscriptions To Federal Reserve Bank Capital Stock

Date 08/04/2021

The Federal Reserve Board on Thursday requested public comment on a proposal to automate non-merger-related adjustments to member banks' subscriptions to Federal Reserve Bank capital stock. The automated process would eliminate the need for member banks to file applications to adjust their stock subscriptions—except in the context of mergers—and would significantly reduce the annual reporting burden.

Regulation I, which governs the issuance and cancellation of capital stock by the Reserve Banks, currently requires that a member bank apply to adjust its stock subscription at least annually and sometimes quarterly. A member bank determines its required stock subscription based on its capital and surplus (or total deposit liabilities for a mutual savings bank) as reported in the member bank's most recent Call Report. The Reserve Banks are developing software that will automatically pull the information needed to calculate member banks' required stock subscriptions from Call Reports and thereby automate the stock adjustment process. More specifically, the Board proposes that a Reserve Bank would adjust a member bank's stock subscription each time the member bank files a Call Report.

The Board is also proposing to make explicit the existing Reserve Bank practice of requiring a surviving member bank apply to adjust its stock subscription before merging or consolidating with another bank. Finally, the Board is proposing two technical amendments to Regulation I and conforming revisions to the FR 2056 reporting form. First, the proposed rule would specify which Reserve Banks are responsible for receiving membership applications from banks located in U.S. territories and dependencies. Second, the proposed rule would state explicitly that a national bank that wants to convert into a state nonmember bank must promptly file with its Reserve Bank an application for cancellation of all its Reserve Bank stock.

The Board's notice is attached. Comments must be received within 60 days after publication in the Federal Register.

Federal Register notice: Federal Reserve Bank Capital Stock (PDF)