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FR2046_20200226_omb

ICR 202002-7100-017 · OMB 7100-0289 · Object 99091101.

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Supporting Statement for the
Selected Balance Sheet Items for Discount Window Borrowers
(FR 2046; OMB No. 7100-0289)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Selected Balance Sheet Items for Discount Window Borrowers (FR 2046; OMB
No. 7100-0289). The balance sheet data collected on the FR 2046 report from certain institutions
that borrow from the discount window are used to monitor discount window borrowing. The
Board’s Regulation A - Extensions of Credit by Federal Reserve Banks (12 CFR Part 201)
requires that Reserve Banks review balance sheet data in determining whether to extend credit
and to help ascertain whether undue use is made of such credit. The FR 2046 report is primarily
used to assess appropriate use of seasonal credit. Certain depository institutions that borrow from
the discount window report on the FR 2046 certain balance sheet data for a period that
encompasses the dates of borrowing.
The Board revised the FR 2046 to update data element definitions to account for the
introduction of the Consolidated Reports of Condition and Income for a Bank with Domestic
Offices Only and Total Assets Less than $5 Billion (FFIEC 051; OMB No. 7100-0036) reporting
form. In addition, the face of the FR 2046 report will be updated to (1) reflect all of the legal
statutes that authorize the collection of the report, (2) indicate that the report is “authorized” (not
required) by law, and (3) clarify that, if the report is requested under the Freedom of Information
Act, the report will be treated as confidential unless the borrower’s identity has already been
disclosed pursuant to the two year lag provided under the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act).1
The current estimated total annual burden for the FR 2046 is 376 hours, and is unaffected
by the adopted revisions. The draft form and instructions are available on the Board’s public
website at https://www.federalreserve.gov/apps/reportforms/review.aspx.
Background and Justification
The Board’s Regulation A establishes rules under which Federal Reserve Banks may
extend credit to depository institutions and defines three basic lending programs: primary credit,
secondary credit, and seasonal credit.2 Primary credit is designed as a back-up funding source to
assist depository institutions in meeting very short-term needs (usually overnight). Since such
credit is provided at an above-market rate and ordinarily is available to generally sound
depository institutions, there is little or no administrative burden on the borrower or the Reserve
1

12 U.S.C. § 248(s).
Regulation A also defines “Emergency credit for others” under which in unusual and exigent circumstances, credit
may be extended to any participant in a program or facility with broad-based eligibility. Regulation A also defines a
temporary Term Auction Facility (TAF) in which depository institutions obtain discount window loans at an interest
rate that is determined as the result of an auction. Borrowers of these two types of credit are not required to file the
FR 2046.
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Banks. Secondary credit is designed as a back-up funding source for depository institutions that
do not qualify for primary credit. Such credit may be provided to meet temporary funding needs
of an institution if such a credit extension would be consistent with the institution’s timely return
to a reliance on market funding sources, or if such credit would facilitate the orderly resolution
of serious financial difficulties of the borrowing institution. Unlike primary credit borrowers,
secondary credit borrowers are subject to a higher level of administration by the lending Reserve
Bank and therefore subject to a slightly higher interest rate. Seasonal credit is designed to assist
smaller institutions in meeting longer-term funding needs arising from regular intra-year patterns
in deposits and loans. Regulation A requires that Reserve Banks ensure that the borrower’s
funding need is truly seasonal in nature and that it will persist for at least four weeks.3 Seasonal
credit is provided at a market-related rate.
There are cases in which discount window borrowing might be considered inappropriate
and inconsistent with the Board’s Regulation A. For example, using the primary or secondary
credit programs as a primary funding source, or using seasonal credit to meet a non-seasonal
funding need, would be considered inappropriate. To guard against such situations, Regulation A
(12 CFR 201.3(c)(2)-(3)) requires Reserve Banks to consider the balance sheet information of
borrowers in determining whether to extend credit and to ensure that any credit provided is used
for an appropriate purpose. In 1998, the Subcommittee on Credit, Reserves, and Risk
Management (SCRRM) requested standardized data reporting for discount window monitoring
as part of its broader effort to promote greater uniformity across the Federal Reserve System in
the administration of the discount window.4 There had been considerable variation across the
twelve Federal Reserve Districts in the specific data elements collected, in the time periods for
which data were requested, and in the formats in which data were reported. The implementation
of the FR 2046 report standardized these aspects of data collection across Reserve Banks and, in
many cases, reduced reporting burden relative to that under the previous data reporting
procedures. The FR 2046 report and instructions have undergone a number of revisions since
1998.5
The FR 2046 report is primarily used to assess appropriate use of seasonal credit.
Although seasonal credit is provided at a market-related rate, borrowers may still find the rate
charged on seasonal credit attractive relative to the rates they would be charged for comparable
credit arrangements from market sources. Therefore, while borrowing at the discount window,
seasonal borrowers must agree to limit their net federal funds sales to an amount consistent with
their usual operating pattern.6 The information obtained on federal funds sold and purchased on
the FR 2046 is used by discount officers to assess whether a seasonal borrower’s position in the
federal funds market is consistent with normal operations.
Similarly, information on a seasonal borrower’s total assets, loans, securities and deposits
is used to monitor whether seasonal credit loans are being used for the program’s intended
3

12 CFR 201.4(c)(1).
This subcommittee is now known as SCRM (Subcommittee on Credit Risk Management). SCRM is a
subcommittee of the Conference of Presidents of the Federal Reserve Banks’ Committee on Credit and Risk
Management.
5
See 75 FR 33807 (June 15, 2010) (describing revisions being implemented); 78 FR 28846 (May 16, 2013)
(describing proposed revisions); and 78 FR 44952 (July 25, 2013) (implementing proposed revisions).
6
See S-Letter 2487, March 1985.
4

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purpose. Total loans and total deposits are used in monitoring seasonal credit borrower’s net
funds availability (defined as total deposits less total loans) during the period of borrowing.
Historical data on net funds availability is a key variable used in establishing an institution’s
seasonal credit line. Discount officers monitor net funds availability during the period of
borrowing to ensure that an institution’s actual funding need during the year is consistent with its
seasonal credit line. Many seasonal credit borrowers, for example, exhibit a marked increase in
their loan portfolios over the first three quarters in each year reflecting increased agricultural
credit demands. Later in the year, loan demand at these banks subsides as farmers sell their crops
and repay their outstanding bank loans with the proceeds. Deviations from this typical pattern
might indicate that seasonal credit was being used inappropriately. For example, if a seasonal
borrower’s total loans increased only modestly during the year while its securities portfolio
expanded sharply, discount officers might contact the institution to verify whether it remained
eligible for the seasonal credit program.
Seasonal credit is typically extended over lengthy periods, and the borrower’s funding
need is expected to change slowly over the term of the borrowing. Therefore, Reserve Banks can
obtain an adequate picture of a borrower’s balance sheet trends by collecting only one day of
data per week. In cases where seasonal credit is extended to institutions in marginal financial
condition, increased monitoring of the borrower is required, and daily data may be collected at
the Reserve Bank’s discretion.
Secondary credit borrowers are not in generally sound condition and are subject to a
higher level of administration by the lending Reserve Bank. For example, if the loan is requested
for a reason other than to cover an unexpected overdraft, the borrower is not allowed to increase
its net exposure to other depository institutions—such as by selling federal funds—without
permission. The FR 2046 data are not routinely collected from secondary credit borrowers, as
adequate information on the need for funding and the reason for borrowing from the Federal
Reserve is usually available from other sources, such as direct contacts with banking regulators.
The FR 2046 report may be required if the Reserve Bank becomes concerned about the
frequency or size of the institution’s borrowing. Secondary credit is generally extended for one
day at a time; therefore, daily data are necessary to capture the borrower’s balance sheet trends. 7
Description of Information Collection
Table 1, below, lists the data items on the FR 2046 report. All data are reported for the
borrower’s domestic offices only and reported in thousands of dollars. The data elements include
the amounts of total securities, federal funds sold and securities purchased under agreements to

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Primary credit borrowers are in generally sound financial condition and as noted above there is usually little or no
administrative burden on their borrowing, and the FR 2046 will usually not be collected from them. However, the
FR 2046 may be required from a primary credit borrower in very unusual circumstances, such as frequent borrowing
or if there is information to suggest that undue use is being made of the credit. In these cases, information on federal
funds sold and purchased (including resale and repurchase agreements, respectively) would be important in
identifying situations in which an institution might be attempting to substitute borrowing at the discount window for
its normal market sources of funding. In addition, information on total assets, loans, deposits, and securities could be
used to assess the borrower’s funding need or use of the credit. Because primary credit is extended for very short
terms, daily data are necessary to capture the borrower’s balance sheet trends.

3

resell, total loans, total assets, total deposits, and federal funds purchased and securities sold
under agreements to repurchase.
Seasonal credit borrowers must submit FR 2046 reports weekly for each two-week period
in which a borrowing is outstanding, and report daily data for Wednesdays only. Seasonal credit
borrowers that already report total securities, federal funds sold and resale agreements, total
loans, and total assets weekly on the Weekly Report of Selected Assets and Liabilities of
Domestically Chartered Commercial Banks and U.S. Branches and Agencies of Foreign Banks
(FR 2644; OMB No. 7100-0075) or total deposits weekly on the Report of Transaction
Accounts, Other Deposits, and Vault Cash (FR 2900; OMB No. 7100-0087) or on the FR 2644
do not need to provide these data on the FR 2046.8
If requested by a Reserve Bank, primary or secondary credit borrowers report daily data
for the week requested. A primary or secondary credit borrower need not supply deposit data on
the FR 2046 report when it already files such information weekly on the FR 2900.

8

The FR 2644 and the FR 2900 employ somewhat different concepts of total deposits. Either concept is adequate
for the purpose of monitoring discount window borrowers.

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Table 1 - Data Items on the FR 2046

File Type	application/pdf
File Title	FR2046_20200226_omb
File Modified	2020-02-26
File Created	2020-02-26