Notice: Federal Reserve Bank Services: Priced Services and Electronic Access Private Sector Adjustment Factor and Fee Schedules (2007)

67600 Federal Register / Vol. 71, No.
225 / Wednesday, November 22, 2006 / Notices
Reason: Failed To Maintain a Valid DLR International, Foster Avenue Industrial Aerostar Global Logistics, Inc., 824 S. Kay
Bond. Park 822 Foster Avenue, Bensenville, IL Avenue, Addison, IL 60101. Officer:
60606. Officer: Danna Rozehnal, President Anthony Flacchino, President (Qualifying
Peter J. King, (Qualifying Individual). Individual).
Deputy Director, Bureau of Certification and Aqualine International, Inc., 17326 Edwards Priority Freight Corp., 377 Oyster Point
Licensing. Road, Suite A207, Cerritos, CA 90703– Blvd., Unit #14, So. San Francisco, CA
[FR Doc. E6–19778 Filed 11–21–06; 8:45 am] 2465. Officers: Makiko Yamamoto Nomoto, 94080. Officer: Bernard Liu, President
President (Qualifying Individual), Lo Hung (Qualifying Individual).
BILLING CODE 6730–01–P
Tien, Director. Damca International, LLC, 9600 NW 25th
Platinum Ocean Logistics, Inc., 2285 Michael Street, Suite 6B, Miami, FL 33172. Officers:
Faraday Drive, Suite 13, San Diego, CA Nils Ekman, President (Qualifying
FEDERAL MARITIME COMMISSION 92154. Officers: Jeffrey Wobbrock, Individual), Nelson Montilla, Vice
President (Qualifying Individual). President
Ocean Transportation Intermediary Trust Moving, Marketing & Logistics, Inc. dba Ocean Freight Forwarder—Ocean
License Rescission of Order of TMM, Logistics, 3533 NW 58th Street, Transportation Intermediary Applicants:
Revocations Miami, FL 33142. Officers: Jose Tarcisio De Denizabel Shipping, Inc., 6903 W. 36
Oliveira, President (Qualifying Individual), Avenue, Suite No. 2, Hialeah, FL 33018.
Notice is hereby given that the Order Milton Cursage, Vice President. Officers: Isabel Ramirez, Vice President
revoking the following license is being Sallaum Group SA, 47371 Darkhollow Falls, (Qualifying Individual), Denizabel
rescinded by the Federal Maritime Sterling, VA 20165. Officers: Ghassan Ramirez, President.
Commission pursuant to section 19 of Sakallah, Vice President (Qualifying Jumar International Corp., 1890 NW 82nd
the Shipping Act of 1984 (46 U.S.C. Individual), Ibrahim Sallaum, President. Avenue, Suite 103, Miami, FL 33126.
chapter 409) and the regulations of the Global Advantage ALS, 161–18 59 Avenue, Officers: Marlen Estevez, Vice President
Commission pertaining to the licensing Fresh Meadows, NY 11365. Officer: Yichun (Qualifying Individual), Juan E. Estevez,
Xu, President (Qualifying Individual). President.
of Ocean Transportation Intermediaries,
Lloyds Global Logistics, Inc. dba Lloyds Toptrans USA Inc., 777 E. Valley Blvd., Apt.
46 CFR Part 515. Cargo, 615 N. Street, Suite #303, El
License Number: 015708N. #4, Alhambra, CA 91801. Officer: Fu-Chiu
Segundo, CA 90245. Officers: Uwe (Fred) Chou, President (Qualifying
Name: Blue Moon Express Limited. Steuernagel, Treasurer/CFO (Qualifying Individual).
Address: Room 1901, 19/F., C C Wu Individual), Renee Maser, President.
Bldg., 302–308, Hennessy Rd, Wanchai IQ Global Logistics Corp, 22580 Glenn Drive, Dated: November 17, 2006.
Hong Kong Suite 10, Sterling, VA 20164. Officers: Kirk Bryant L. VanBrakle,
Order Published: FR: 11/01/06 Michael Weibel, President (Qualifying Secretary.
(Volume 71, No. 211, Pg. 64281). Individual). [FR Doc. E6–19776 Filed 11–21–06; 8:45 am]
Non-Vessel—Operating Common Carrier and
Peter J. King, Ocean Freight Forwarder Transportation BILLING CODE 6730–01–P
Deputy Director Bureau of Certification and Intermediary Applicants:
Licensing. Stonepath Logistics Domestic Services, Inc.,
[FR Doc. E6–19780 Filed 11–21–06; 8:45 am] 1150 Gateway Drive, Shakopee, MN 55379. FEDERAL RESERVE SYSTEM
BILLING CODE 6730–01–P Officers: Charles R. Cain, Vice President
(Qualifying Individual), Dennis L. Pelino, [Docket No. OP–1269]
Chairman.
Stonepath Logistics Government Services, Federal Reserve Bank Services
FEDERAL MARITIME COMMISSION
Inc., 45070 Old Ox Road, Suite 100,
Sterling, VA 20166. Officers: Charles R.
AGENCY: Board of Governors of the
Ocean Transportation Intermediary Federal Reserve System.
Cain, Chief Operating Officer (Qualifying
License Applicants Individual), Robert Arovas, President. ACTION: Notice.
Notice is hereby given that the RCB Logistics Corp., 67 West Merrick Road,
Valley Stream, NY 11580. Officers: SUMMARY: The Board has approved the
following applicants have filed with the
Federal Maritime Commission an Salvatore DiStefano, President (Qualifying private sector adjustment factor (PSAF)
Individual), Vincenzo Matranga, Vice for 2007 of $132.5 million and the 2007
application for license as a Non-Vessel- President.
Operating Common Carrier and Ocean fee schedules for Federal Reserve priced
Global Transportation Management, LLC dba services and electronic access. These
Freight Forwarder—Ocean GTM-Global Transportation Management,
Transportation Intermediary pursuant to actions were taken in accordance with
LLC, 35790 Northline Road, Suite C,
section 19 of the Shipping Act of 1984 Romulus, MI 4817. Officer: Mark Brodie,
the requirements of the Monetary
as amended (46 U.S.C. Chapter 409 and Managing Member (Qualifying Individual). Control Act of 1980, which requires
46 CFR 515). Midwest Motor Express, Inc. dba MME that, over the long run, fees for Federal
Persons knowing of any reason why Global Lines, 314 North 27th Street, Fargo, Reserve priced services be established
the following applicants should not ND 58102. Officers: Ronald I. Martin, Dir. on the basis of all direct and indirect
receive a license are requested to Of Int’l. Logistics (Qualifying Individual), costs, including the PSAF. The Board
Martin Kling, President. has also approved maintaining the
contact the Office of Transportation Trans-Alliance International Forwarding Co.,
Intermediaries, Federal Maritime current earnings credit rate on clearing
Inc. dba Nova Ocean Line, 310 Cedar Lane, balances.
Commission, Washington, DC. 20573. Third Floor, Teaneck, NJ 07666. Officers:
Enrique Vera, President (Qualifying DATES: The new fee schedules and
Non-Vessel—Operating Common Carrier
Ocean Transportation Intermediary Individual), Olga Vera, Secretary. earnings credit rate become effective
Applicants: Express Cargo USA LLC, 1675 York Avenue, January 2, 2007.
Herbie & Son’s Brokers & Shipping Int. Co., Suite 31–B, New York, NY 10128. Officer: FOR FURTHER INFORMATION CONTACT: For
6660 Sunset Strip, Unit #4, Sunrise, FL Ami Steinfeld, President (Qualifying
questions regarding the fee schedules:
pwalker on PROD1PC61 with NOTICES
33313. Officer: Victor Thomas, President Individual).

Intercontinental Forwarding USA, Corp. dba Jack K. Walton II, Associate Director,
(Qualifying Individual).
Aerocosta Global Systems, Inc., 189–33 46 ICF USA, 3671 NW 81 Street, Miami, FL (202/452–2660); Jeffrey S.H. Yeganeh,
Road 1 FL, Flushing, NY 11358. Officers: 33147. Officers: Byron Baez, Vice President Manager, Retail Payments, (202/728–
Hyun Joon Chung, President (Qualifying (Qualifying Individual), Geovanny Coellar 5801); Edwin J. Lucio, Senior Financial
Individual). N., President Services Analyst, (202/736–5636),
VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 E:\FR\FM\22NON1.SGM 22NON1
Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices 67601
Division of Reserve Bank Operations balances (NICB). From 1996 through change the method used to periodically
and Payment Systems. For questions 2005, the Reserve Banks recovered 98.4 recognize these changes to the funded
regarding the PSAF and earnings credits percent of their total expenses status of employers’ benefit plans in the
on clearing balances: Gregory L. Evans, (including special project costs and income statement. Because the Reserve
Assistant Director, (202/452–3945); imputed costs) and targeted after-tax Banks’ benefit plans have net
Brenda L. Richards, Manager, Financial profits or return on equity (ROE) for unrecognized losses, the existing
Accounting, (202/452–2753); Jonathan providing priced services.1 ‘‘shareholders’’ will incur a loss of value
Mueller, Senior Financial Analyst, (202/ B. Discussion—Table 1 summarizes upon the initial adoption of FAS 158,
530–6291); or Jonathan Senner, Senior 2005, 2006 estimated, and 2007 which will be reflected in cost recovery
Financial Analyst, (202/452–2042), budgeted cost recovery rates for all beginning in 2006.3, 4
Division of Reserve Bank Operations priced services. Cost recovery is These gains or losses that now must
and Payment Systems. For users of estimated to be 108.2 percent in 2006, be recognized on the balance sheet stem
Telecommunications Device for the Deaf which does not include the effects of from amendments to benefit plans,
(TDD) only, please call 202/263–4869. FAS 158 discussed below, and budgeted changes in actuarial and earnings
Copies of the 2007 fee schedules for the to be 101.5 percent in 2007. The assumptions, and differences between
check service are available from the performance of the check service actuarial assumptions and actual
Board, the Federal Reserve Banks, or the heavily influences the aggregate cost experience. These factors can be highly
Reserve Banks’ financial services Web recovery rates because the check service volatile in any given year and, as a
site at http://www.frbservices.org. accounts for approximately 80 percent result, recognizing them could cause
SUPPLEMENTARY INFORMATION: of the total cost of priced services. The cost recovery to be significantly above
electronic services (FedACHSM, the or below 100 percent. To avoid short-
I. Private Sector Adjustment Factor and Fedwire Funds Service and National run volatility in priced-services fees and
Priced Services Settlement Service (NSS), and the their impact on the financial industry,
A. Background—Each year, as Fedwire Securities Service) account for past changes to these unrecognized
required by the Monetary Control Act of approximately 20 percent of total costs.2 gains or losses under FAS 158 will not
1980 (MCA), the Reserve Banks set fees On September 29, 2006, the Financial be considered when setting priced-
for priced services provided to Accounting Standards Board (FASB) services fees, but they will continue to
depository institutions. These fees are issued a statement that significantly be factored into the fee setting process
set to recover, over the long run, all affects the Reserve Banks’ priced to the extent that they are recognized
direct and indirect costs and imputed services pro forma balance sheet as well through the systematic approach
costs, including financing costs, taxes, as cost recovery in 2006 and thereafter. required by GAAP. Future changes to
and certain other expenses, as well as Statement of Financial Accounting these unrecognized gains or losses
return on equity (profit) that would have Standards No. 158: Employers’ cannot be predicted and, therefore,
been earned if a private business firm Accounting for Defined Benefit Pension cannot be considered in 2007 budgeted
provided the services. The imputed and Other Postretirement Plans (FAS cost recovery. In light of the recent
costs and imputed profit are collectively 158) requires affected employers to adoption of FAS 158, the Board will
referred to as the PSAF. Similarly, record the actual funded status of their continue to study how incorporating
investment income is imputed and benefit plans on their balance sheets these gains or losses affects its
netted with related direct costs effective December 31, 2006, and any assessment of the Federal Reserve
associated with clearing balances to changes to the funded status in Banks’ compliance with MCA’s long-run
estimate net income on clearing subsequent years. FAS 158 does not cost recovery requirement.
TABLE 1.—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a
[$ millions]
5e
3 4d Recovery rate
1b 2c
Year Net income Target after target
Revenue Total expense (ROE) [1 ¥ 2] ROE ROE [1/(2 + 4)]
(percent)
2005 ................................................................. 994.7 834.7 160.0 103.0 106.1

2006 (estimate) ................................................ 1,020.2 871.0 149.2 72.0 108.2
2007 (budget) ................................................... 980.2 885.0 95.2 80.4 101.5
a Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding.
b Revenue includes net income on clearing balances (NICB). Clearing balances are assumed to be invested in a broad portfolio of investments,
such as Treasury securities, government agency securities, commercial paper, municipal and corporate bonds, and money market and mutual
funds. To impute income, a constant spread is determined from the historical average return on this portfolio and applied to the rate used to de-
termine the cost of clearing balances. NICB equals the imputed income from these investments less earnings credits granted to holders of clear-
ing balances. The cost of earnings credits is based on the discounted three-month Treasury bill rate.
c The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses include taxes, FDIC insur-
ance, Board of Governors’ priced services expenses, the cost of float, and interest on imputed debt, if any. Credits or debits related to the ac-
counting for pensions under FAS 87 are also included.
d Target ROE is the after-tax ROE included in the PSAF.
1 The ten-year recovery rate is based upon the pro 3 As used in this context, the term ‘‘shareholder’’ 4 Before FAS 158, generally accepted accounting
forma income statements for the Federal Reserve does not refer to the actual member banks of the principles (GAAP) required employers with
Banks’ priced services published in the Board’s Federal Reserve System, but rather to the implied pension and other postretirement benefit plans to
Annual Report. shareholders who would have an ownership disclose the funded status of the plans in their
2 FedACH and Fedwire are registered interest if the Federal Reserve priced services were financial statement footnotes.
servicemarks of the Reserve Banks. provided by a private firm.
67602 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices
e Cost recovery is estimated to be 77.2 percent in 2006, including the estimated loss of $378 million resulting from the implementation of FAS
158. Future changes to these unrecognized items cannot be estimated.
Table 2 presents an overview of cost

recovery by service line for 2005
through 2007.
TABLE 2.—PRICED SERVICES COST RECOVERY

[percent]
Priced service 2005 2006 Budget 2006 Estimate a 2007 Budget b
All services ....................................................................................... 106.1 102.6 108.2 101.5

Check ............................................................................................... 106.1 102.4 109.1 101.5
FedACH ........................................................................................... 106.4 101.0 101.1 101.6
Fedwire Funds and NSS ................................................................. 106.7 105.4 109.1 102.3
Fedwire Securities ........................................................................... 104.7 105.6 103.7 101.6
a Including the FAS 158 effect, the reported recovery rates are: All services—77.2%, Check—78.0%, FedACH—72.6%, Fedwire Funds and
NSS—78.6%, and Fedwire Securities—65.1%.
b 2007 budget figures reflect the most recent data from Reserve Banks. The Reserve Banks will transmit final budget data to the Board in No-
vember 2006, for Board consideration in December 2006.
1. 2006 Estimated Performance—The 2. 2007 Private Sector Adjustment products 9.6 percent, and payor bank
Reserve Banks estimate that they will Factor—The 2007 PSAF for Federal check products 8.1 percent.
recover 108.2 percent (77.2 percent Reserve priced services is $132.5 • The Reserve Banks will decrease
including the effects of FAS 158) of the million. This amount represents an Check 21 fees for FedForward products
costs of providing priced services, increase of $14.8 million from the 2006 delivered to electronic endpoints 12.5
including imputed expenses and PSAF of $117.7 million. This increase is percent but to increase Check 21 fees for
targeted ROE, compared with a primarily due to an increase in the cost FedForward products delivered to
budgeted recovery rate of 102.6 percent, of equity.5 substitute-check endpoints 3.1 percent.
as shown in table 2. The Reserve Banks 3. 2007 Projected Performance—The The Reserve Banks also will offer a
estimate that they will exceed $1 billion Reserve Banks project a priced services restructured deposit discount of $0.003
in revenue for the first time and that all cost recovery rate of 101.5 percent. The for each check presented through
services will achieve full cost recovery, 2007 fees for priced services are FedReceipt products. FedReturn fees
excluding the effects of FAS 158. The projected to result in a net income of will remain unchanged.
Reserve Banks estimate that they will $95.2 million compared with the $80.4 • With the 2007 fee changes, the price
fully recover actual and imputed million required to achieve full cost index for the check service will have
expenses and earn net income of $149.2 recovery. The major risks to the Reserve increased 57 percent since 1997.
million compared with the target of Banks’ ability to achieve their budget
$72.0 million. The greater-than- targets are a greater decline in the FedACH
expected net income is largely driven by Reserve Banks’ paper check volume • The Reserve Banks will increase the
the performance of the check service, than the projected 24.0 percent, monthly subscription fee for the
which had greater-than-expected Check unanticipated problems with Informational Extract File from $10 to
21 and paper return volumes, as well as technological upgrades that could result $20.
greater-than-expected net income on in significant cost overruns, and lower- • With the 2007 fee change, the price
clearing balances. than-expected electronic payments index for the FedACH service will have
Other than the effects of FAS 158, volumes due to competition. In light of decreased 65 percent since 1997.
greater-than-expected Check 21 volume these risks, the Reserve Banks will
has been the single most significant continue to refine their business and Fedwire Funds and National Settlement
factor influencing priced services cost operational strategies to improve Services
recovery as additional fee revenue has efficiency and reduce excess capacity • The Reserve Banks will raise the
exceeded the costs of processing the and other costs. These efforts should surcharge for offline funds transfers
unexpected volumes. The Reserve position the Reserve Banks to achieve from $20 to $30 and to decrease the
Banks have also continued their efforts their financial and other payment online transfer fee by one cent in all
to downsize their paper check- system objectives and statutory pricing tiers.
processing infrastructure as paper check requirements over the long run. • With the 2007 fee changes, the price
volumes continue to decline 4. 2007 Pricing—The following index for the Fedwire Funds and
nationwide. The Reserve Banks have summarizes the changes in the Reserve National Settlement Services will have
already reduced the number of sites at Banks’ fee schedules for priced services decreased 55 percent since 1997.
which they process checks from forty- in 2007:
Fedwire Securities Service
five in 2003 to twenty-two in 2006 and Check
will discontinue processing checks at • The Reserve Banks will increase the
• The Reserve Banks will raise paper
four other offices by early 2008. These online transfer fee by two cents, the
check fees for forward collection check

check restructuring efforts have enabled monthly maintenance fee from $15 to
products 5.0 percent, return check
the Reserve Banks to return to full cost $16, and the surcharge for offline
recovery by reducing costs in line with 5 The cost of equity increased due to an increase
securities transfers from $50 to $60.
the decline in revenues associated with in the ROE, which is slightly offset by a reduction • With the 2007 fee changes, the price
paper check processing. in imputed equity. index for the Fedwire Securities Service
will have decreased 46 percent since index for paper check and electronic percent growth in the GDP price index
1997. payment services in 2007 are projected over the same period.6
5. 2007 Price Index—Figure 1 to increase 6.0 percent and 0.1 percent, BILLING CODE 6210–01–P
compares indexes of fees for the Reserve respectively. Based on 2006 data
Banks’ priced services with the GDP available to date, the price index for all FIGURE 1
price index. The price index for all priced services is expected to increase PRICE INDEXES FOR FEDERAL
Reserve Bank priced services is an estimated 20.3 percent from 1997 to RESERVE PRICED SERVICES
projected to increase 1.0 percent in 2006, compared with an estimated 22.0
2007, compared with the 2.3 percent 6 In the first half of 2006, the GDP price index
growth anticipated in 2006. The price grew at an annualized rate of 3.3 percent.
C. Private Sector Adjustment Factor— financing and equity costs in the PSAF levels of debt and equity to impute and
The method for calculating the requires determining the appropriate then applying the applicable financing
EN22NO06.013</GPH>
rates. In this process, a pro forma priced 1. Financing rates—Equity financing month Treasury bill rate.11 12 The
services balance sheet using estimated rates are based on the target return on calculation also involves determining
Reserve Bank assets and liabilities equity (ROE) result of the capital asset the priced-services cost of earnings
associated with priced services is pricing model (CAPM). In the CAPM, credits (amounts available to offset
developed, and the remaining elements the required rate of return on a firm’s service fees) on contracted clearing
that would exist if the Reserve Banks’ equity is equal to the return on a risk- balances held, net of expired earnings
priced services were provided by a free asset plus a risk premium. To credits, based on a discounted Treasury
private business firm are imputed. The implement CAPM, the risk-free rate is bill rate. Rates and clearing balance
same generally accepted accounting based on the three-month Treasury bill, levels used in the NICB estimate are
principles that apply to commercial the beta is assumed to be equal to 1.0, based on the most-recent rates and
entity financial statements also apply to which approximates the risk of the clearing balance levels.13 Because
the relevant elements in the priced market as a whole, and the monthly clearing balances are held for clearing
services pro forma financial statements. returns in excess of the risk-free rate priced-services transactions or offsetting
The amount of the Reserve Banks’ over the most recent 40 years are used priced-services fees, they are directly
assets that will be used to provide as the market risk premium. The related to priced services. The net
priced services during the coming year resulting ROE influences the dollar level earnings or expense attributed to the
is determined using Reserve Bank of the PSAF because this is the return investments and the cost associated
information on actual assets and a shareholder would expect in order to with holding clearing balances,
projected disposals and acquisitions. invest in a private business firm. therefore, are considered net income for
The priced portion of assets is For simplicity, given that federal priced services activities.
determined based on the allocation of corporate income tax rates are 4. Adopting FAS 158—On September
the related depreciation expense. The graduated, state income tax rates vary, 29, 2006, FASB issued FAS 158:
priced portion of actual Reserve Bank and various credits and deductions can Employers’’ Accounting for Defined
liabilities consists of balances held by apply, a specific income tax expense is Benefit Pension and Other
Reserve Banks for clearing priced- not calculated for Reserve Bank priced Postretirement Plans. This statement,
services transactions (clearing balances), services. Instead, the Board targets a effective for fiscal years ending after
and other liabilities such as accounts pre-tax ROE that would provide December 15, 2006, requires affected
payable and accrued expenses. sufficient income to fulfill its income employers to show the actual funded
Long-term debt is imputed only when tax obligations.10 To the extent that the status of their benefit plans by
core clearing balances and long-term actual performance results are greater or recognizing the deferred elements
liabilities are not sufficient to fund long- less than the targeted ROE, income taxes related to pension and postretirement
term assets or if the interest rate risk are adjusted using an imputed income accounting as adjustments to the related
sensitivity analysis, which measures the tax rate. Because the Reserve Banks assets or liabilities on their balance
interest rate effect of the difference provide similar services through their sheets. These deferred elements include
between interest rate sensitive assets correspondent banking activities, unrecognized gains or losses (resulting
and liabilities, indicates that a 200 basis including payment and settlement from changes in actuarial assumptions,
point change in interest rates would services, and equity is imputed to meet such as the discount rate, and
change cost recovery more than two the FDIC requirements of a well- differences between these assumptions
percentage points.7 Short-term debt is capitalized depository institution, the and actual experience) and prior service
imputed only when short-term imputed income tax rate is the median costs or credits (resulting from
liabilities and clearing balances not of the rates paid by the top fifty bank amendments to existing benefit plans).14
used to finance long-term assets are holding companies (BHCs) based on FAS 158 does not change the method
insufficient to fund short-term assets. deposit balance over the past five years used to periodically recognize these
Equity is imputed to meet the FDIC adjusted to the extent that they invested deferred elements in the income
definition of a well-capitalized in tax-free municipal bonds. statement.
depository institution for insurance 2. Other Costs—The PSAF also Because the Reserve Banks offer
premium purposes and represents the includes the estimated priced services- employees defined benefit pension and
market capitalization, or shareholder related expenses of the Board of other postretirement benefits, the
value, for priced services.8 9 Governors and imputed sales taxes adoption of FAS 158 will affect the
based on Reserve Bank estimated Reserve Banks’ 2006 balance sheets and
7 A portion of clearing balances is used as a
expenditures. An assessment for FDIC financial statement disclosures. Given
funding source for priced-services assets. Long-term insurance, when required, is imputed that these benefits are provided to
assets are partially funded from core clearing
balances, which are currently $4 billion. Core based on current FDIC rates and employees involved in priced services,
clearing balances are considered the portion of the projected clearing balances held with
11 The investment portfolio is composed of
balances that has remained stable over time without the Federal Reserve.
regard to the magnitude of actual clearing balances. investments comparable to a BHC’s investment
3. Net Income on Clearing Balances— holdings, such as short-term Treasury securities,
8 As mentioned in footnote 3, the term
‘‘shareholder’’ does not refer to the actual member

The NICB calculation is made each year government agency securities, commercial paper,
banks of the Federal Reserve System, but rather to along with the PSAF calculation and is long-term corporate bonds, and money market
the implied shareholders who would have an based on the assumption that Reserve funds. See table 7 for the investments imputed in
ownership interest if the Federal Reserve priced 2007.
Banks invest clearing balances net of 12 NICB is projected to be $139.6 million for 2007
services were provided by a private firm.
9 The FDIC requirements for a well-capitalized
imputed reserve requirements and using a constant spread of 29 basis points over the
depository institution are (1) a ratio of total capital balances used to finance priced-services three-month Treasury bill, and applying this rate to
to risk-weighted assets of 10 percent or greater; and assets. Using these net clearing balance the clearing balance levels used in the 2007 pricing
levels, Reserve Banks impute a constant process. The 2006 NICB estimate is $113.2 million.
(2) a ratio of Tier 1 capital to risk-weighted assets

13 July 2006 rates and balances were used to
of 6 percent or greater; and (3) a leverage ratio of spread, determined by the return on a
Tier 1 capital to total assets of 5 percent or greater. estimate the 2007 NICB.
The Federal Reserve priced services balance sheet portfolio of investments, over the three- 14 Previously, GAAP required employers with
has no components of Tier 1 or total capital other pension and other postretirement benefit plans to
than equity; therefore, requirements 1 and 2 are 10 Other taxes, such as sales taxes, are included disclose these deferred elements in their financial
essentially the same measurement. in priced-services actual or imputed costs. statement footnotes.
the effects of the new accounting small share of total equity, they may be exceed or fall short of 100 percent. One
standard must also be included in the able to absorb the FAS 158 adjustments component of the annual FAS 158 entry
pro forma priced services balance and still maintain adequate regulatory is unrecognized prior service cost,
sheet.15 The current estimate is net capital levels. which arises from certain amendments
unrecognized losses for the December For the purpose of measuring priced- to existing benefit plans and is
31, 2006, deferred elements. services cost of equity, the Reserve amortized according to GAAP over a
To reflect the funded status of the Banks assume that existing shareholders specific period (usually twelve to fifteen
Reserve Banks’ benefit plans on the will sustain an economic loss of value years). This factor will have a negligible
2006 pro forma priced services balance as a result of implementing the FAS 158 effect on reported long-run cost recovery
sheet as required by FAS 158, the accounting changes.21 This assumption because the initial recognition of prior
Reserve Banks will record a reduction in implies that these shareholders will service cost (a negative adjustment to
the prepaid pension asset.16 The offset expect a return on only the remaining cost recovery) should eventually be
to the asset reduction will be twofold: portion of their investment (original offset by positive adjustments to cost
The amount by which the pension asset investment amount less AOCI recovery as this cost is amortized over
is reduced, net-of-tax, will be reported reduction) and that the new equity time and incorporated into the price-
as a negative component of equity called investors will expect a similar return on setting process. The other component of
accumulated other comprehensive their investment. This will leave the the annual FAS 158 entry, unrecognized
income (AOCI), while the remainder cost of equity, and overall PSAF, gains or losses, results from changes in
will be reported as a deferred tax virtually unchanged from what it was actuarial assumptions (discount rates,
asset.17 Similarly, the full unfunded before the application of FAS 158, return on plan assets, demographic
status of the postretirement benefits because the existing shareholder changes, and so on) and differences
liability must be recognized by investment that was eliminated by the between these assumptions and actual
increasing the liability on the priced AOCI reduction will be replaced by the experience. These actuarial gains or
services pro forma balance sheet, with new equity required to replenish total losses could be highly volatile and may
the offsetting net-of-tax portion of this equity to 5 percent of total assets and or may not offset each other for as long
entry reflected in AOCI and the balance remain well-capitalized according to as the Federal Reserve continues to offer
assigned to the deferred tax asset.18 FDIC guidelines. NICB will increase, pension and postretirement benefits. For
Because priced-services equity is however, because this new equity will this reason, GAAP does not require the
imputed at the minimum level be available for investment. recognition of these gains or losses until
necessary to meet the FDIC definition of Because the Reserve Bank benefit they exceed a corridor of 10 percent of
a well-capitalized depository plans have net unrecognized losses, the the greater of the benefit obligations or
institution, any direct reduction to Reserve Bank priced services will assets. In addition, because these factors
equity through AOCI as a result of FAS recognize this reduction in value in cost and the resulting year-to-year changes in
158 will require the Reserve Banks to recovery for 2006. The Reserve Bank the associated assets and liabilities are
impute additional equity.19, 20 priced services assume that existing not measured until after year-end and
It is unclear whether a private firm shareholders incur these losses upon the cannot be estimated for pricing
with a similar balance sheet would initial implementation of FAS 158, with purposes, long-run cost recovery could
actually raise additional equity to offset the losses flowing to the shareholders be greater or less than 100 percent
the FAS 158 balance sheet changes. rather than to the firm itself. Prices for depending on the amount of the
Because most BHCs hold capital 2007 and thereafter, however, will be set actuarial gains or losses that are
balances in excess of the minimum level to achieve full cost recovery over the recognized each year.
to be considered well-capitalized, and long run before the annual FAS 158 5. Analysis of the 2007 PSAF—The
because their pension assets and adjustments, with a measure of cost- increase in the 2007 PSAF is primarily
liabilities represent a comparatively recovery performance provided for each due to an increase in the required ROE
year that includes the FAS 158 result provided by the CAPM, which
15 The costs associated with pension and
adjustment. This approach will limit the offsets an overall reduction in imputed
postretirement benefits as recognized under GAAP equity.
have always been allocated to the priced services increased year-to-year price volatility
income statement as direct or indirect expense that would result from including annual a. Asset Base—The estimated 2007
items. FAS 158 adjustments in the setting of Federal Reserve assets, reflected in table
16 Although recognizing the deferred elements
priced-services fees. It is also consistent 3, have decreased $1,303.0 million.
will result in a decrease to the pension asset and There is a decline in imputed
equity in 2006, the Reserve Banks could have with the FASB’s systematic approach of
increases or decreases to these balance sheet items deferring recognition of prior service investments in marketable securities of
in future years. costs or credits and actuarial gains or $1,118.1 million and in imputed reserve
17 Other financial accounting standards require
losses to reduce the inherent volatility requirements of $163.5 million, which
that future tax consequences of events be
of these deferred items on current are imputed based on the estimated
recognized in an entity’s financial statements. FAS level of clearing balances held, and in
158 requires employers to compute the AOCI expense.
adjustment net-of-tax. Including the annual FAS 158 the prepaid pension asset of $446.9
18 Although recognizing the deferred elements
adjustment in a measurement of priced million as a result of the FAS 158
would result in an increase to the benefits liability services cost recovery, however, could accounting changes. These declines are
and decrease to equity in 2006, the Reserve Banks
produce highly variable actual cost slightly offset by an increase in items in
could have increases or decreases to these balance process of collection of $262.2 million,
sheet items in future years. recovery results from year-to-year that
19 Under current reporting requirements, FAS 158
due to higher estimated float
adjustments to equity via AOCI would be included 21 The value of equity reported in the pro forma receivables, and in the deferred tax asset
in the calculation of Tier 1 capital for regulatory associated with implementing FAS 158
priced services balance sheet is assumed to equal

purposes, thus reducing priced-services equity to the market value of equity. Because priced-services of $159.3 million.
below the well-capitalized threshold. fees are set to maintain this implied shareholder As shown in table 4, the assets
20 The Federal Reserve priced services could elect value (that is, not to substantially over or
to restore equity to an adequate, but less than well- underrecover), the targeted ROE equals the market
financed through the PSAF have
capitalized, level and incur the resulting FDIC return these shareholders would expect priced decreased. Short-term assets funded
assessment. services to earn, or recover, each year. with short-term payables and clearing
balances total $10.2 million. This interest rates increases cost recovery by PSAF is $742.9 million, a decrease of
represents an $18.2 million decrease 1.5 percentage points. The established $65.1 million versus the imputed equity
from the short-term assets funded in threshold for a change in cost recovery for 2006. This includes additional
2006 due to an increase in expected is two percentage points; therefore, imputed equity of $361.0 million to
short-term payables. Long-term interest rate risk associated with using offset the FAS 158 reduction to AOCI.
liabilities and equity are greater than these balances is within acceptable
In 2007, the capital to total assets ratio
long-term assets; therefore, no core levels and no long-term debt is imputed.
clearing balances are used to fund long- Table 6 shows the imputed PSAF and the capital to risk-weighted assets
term assets. elements, the pretax ROE, and other ratio both meet or exceed regulatory
b. Debt and Equity Costs and Taxes— required PSAF costs for 2006 and 2007. guidelines as required by the FDIC
As previously mentioned, core clearing The increase in ROE is primarily caused definition of a well-capitalized
balances are available as a funding by an increase in the risk-free rate of depository institution for insurance
source for priced-services assets. Table return. Sales taxes increased from $7.7 premium purposes. Equity is based on
4 shows that $10.2 million in clearing million in 2006 to $8.5 million in 2007. 5 percent of total assets, and capital to
balances is used to fund priced-services The effective income tax rate used in risk-weighted assets is 15.0 percent.
assets in 2007. The interest rate 2007 increased to 31.5 percent from 29.8 Based on the final regulations recently
sensitivity analysis in table 5 indicates percent in 2006. The priced-services adopted by the FDIC, the Reserve Bank
that a 200 basis point decrease in portion of the Board’s expenses priced services estimate a one-time
interest rates affects the ratio of rate- decreased $0.8 million from $7.5 assessment credit of $16.6 million.
sensitive assets to rate-sensitive million in 2006 to $6.7 million in 2007. Because the estimated assessment for
liabilities and produces a decrease in c. Capital Adequacy and FDIC 2007 does not exceed the one-time
cost recovery of 1.4 percentage points, Assessment—As shown in table 3, the assessment credit, no net FDIC
while an increase of 200 basis points in amount of equity imputed for the 2007 assessment is imputed for 2007.
EN22NO06.014</GPH>
EN22NO06.015</GPH>
EN22NO06.016</GPH>
EN22NO06.017</GPH>
D. Earnings Credits on Clearing clearing balances.39 The Reserve Banks

Balances—The Board has approved
maintaining the current rate of 80 39 Two adjustments are applied to the earnings
percent of the three-month Treasury bill credit rate so that the return on clearing balances it maintained the same balances at a private-sector
EN22NO06.018</GPH>
rate to calculate earnings credits on at the Federal Reserve is comparable to what the correspondent. The ‘‘imputed reserve requirement’’
depository institution (DI) would have earned had adjustment is made because a private-sector
will continue to calculate earnings Reserve priced services by institutions Earnings credits, which are calculated
credits (amounts available to offset that did not have sufficient reserve monthly, can be used only to offset
service fees) for the marginal reserve balances to support the settlement of charges for priced services and expire if
requirement adjusted portion of clearing their payment transactions. The not used within one year.41
balances at the federal funds rate.40 earnings credit calculation uses a E. Check Service—Table 8 below
Clearing balances were introduced in percentage discount on a rolling shows the 2005, 2006 estimate, and
1981, as a part of the Board’s thirteen-week average of the annualized 2007 budgeted cost recovery
implementation of the Monetary Control coupon equivalent yield of three-month performance for the commercial check
Act, to facilitate access to Federal Treasury bills in the secondary market. service.
TABLE 8.—CHECK PRO FORMA COST AND REVENUE PERFORMANCE

[$ millions]
5
3 Recovery rate
2 4
1 Net income after target
Year Total Target
Revenue (ROE) ROE
expense ROE
[1¥2] [1/(2 + 4)]
(Percent)
2005 ..................................................................................... 817.5 688.7 128.7 82.0 106.1

2006 (estimate) .................................................................... 837.4 710.8 126.6 57.1 a 109.1
2007 (budget) ....................................................................... 784.3 709.9 74.4 63.2 101.5

a Including FAS 158, the estimated cost recovery for the check service is 78.0%.
1. 2006 Estimate—For 2006, the Check 21 substitute check printing, Year-to-date figures, however,
Reserve Banks estimate that the check pension costs, and imputed taxes. understate the current penetration rate
service will recover 109.1 percent of The greater-than-expected electronic of Check 21 products, as volume has
total expenses and targeted ROE, check volume can be attributed to faster- increased throughout 2006. In August
compared with the budgeted recovery than-anticipated adoption of Check 21 2006, the Check 21 deposit penetration
rate of 102.4 percent. The Reserve Banks rate rose to 16.6 percent. This volume
products. The number of checks
expect to recover all actual and imputed represents 42 percent of the value of
deposited and presented electronically
expenses of providing check services checks collected through the Reserve
and earn net income of $126.6 million has grown steadily in 2006 (see table 9).
Year-to-date through August 2006, 10.3 Banks because many depository
(see table 8). institutions are using Check 21 products
The higher-than-budgeted cost percent of the Reserve Banks’’ volume
was deposited and 2.2 percent was to collect their higher value checks more
recovery is the result of revenue that rapidly. Recent trends, however,
was $103.0 million higher than presented using Check 21 products.42
Depository institutions have been indicate that the average value of checks
expected, which was partially offset by
slower to accept check presentments deposited using Check 21 products will
expenses that were $50.7 million greater
electronically because financial decline because an increasing number of
than budgeted. The higher revenue is
due to greater-than-budgeted electronic incentives are generally stronger for depository institutions are choosing to
check collection and paper check return electronic check deposit and because clear all of their checks using these
volumes, as well as greater-than- integrating electronic presentments into products.
expected NICB. The higher costs were back-office processing and risk-
largely due to greater-than-budgeted management systems can be a complex
personnel and materials costs related to and expensive undertaking.
correspondent would be required to hold reserves The formula used by the Reserve Banks to apply when the average balance falls below the
against the respondent’s balance with it. As a result, calculate earnings credits can be expressed as contracted amount less the allowance, although
the correspondent would reduce the balance on e = [ b * (1¥FRR) * r] + [ b * (MRR) * f] credits are still earned on the average maintained
which it would base earnings credits for the Where e is total earnings credits, b is the average balance.
respondent because it would be required to hold a clearing balance maintained, FRR is the assumed 42 The Reserve Banks also offer non-Check 21
portion, determined by its marginal reserve ratio, in Reserve Bank marginal reserve ratio (10 percent), r
the form of non-interest-bearing reserves. For electronic presentment products. In August 2006,
is the earnings credit rate, MRR is the marginal 26.0 percent of the Reserve Banks’ deposit volume
example, if a DI held $1 million in clearing balances reserve ratio of the DI holding the balance (either
with a correspondent bank and the correspondent was presented to paying banks using these
0 percent, 3 percent, or 10 percent), and f is the products. The majority of checks presented through
had a marginal reserve ratio of 10 percent, then the
average federal funds rate. A DI that meets its
correspondent bank would be required to hold non-Check 21 electronic presentment products are
reserve requirement entirely with vault cash is
$100,000 in reserves, and it would typically grant delivered to the paying banks.
assigned a marginal reserve requirement of zero.
credits to the respondent based on 90 percent of the 43 The Reserve Banks’ Check 21 product suite
40 This calculation adjusts earnings credits as
balance, or $900,000. This adjustment imputes a includes FedForward, FedReturn, and FedReceipt.
marginal reserve ratio of 10 percent to the Reserve though account holders could adjust their reserve
requirement for a ‘‘due from deduction’’ for clearing FedForward is the electronic alternative to forward
Banks.
balances held with a Reserve Bank. check collection; FedReturn is the electronic
The ‘‘marginal reserve requirement’’ adjustment alternative to paper check return; and FedReceipt
41 A band is established around the contracted
accounts for the fact that the respondent can deduct
clearing balance to determine the maximum balance products are electronic receipt of Check 21 items.
balances maintained at a correspondent, but not the
Under FedReceipt, the Reserve Banks electronically
Federal Reserve, from its reservable liabilities. This on which credits are earned as well as any
reduction has value to the respondent when it frees deficiency charges. The clearing balance allowance present only the checks that were deposited
up balances that can be invested in interest-bearing is 2 percent of the contracted amount, or $25,000, electronically or that were deposited in paper form
instruments, such as federal funds. For example, a whichever is greater. Earnings credits are based on and converted into electronics by the Reserve
respondent placing $1 million with a correspondent the period-average balance maintained up to a Banks. Under FedReceipt Plus, the Reserve Banks
rather than the Federal Reserve would free up maximum of the contracted amount plus the electronically present all checks drawn on the
$30,000 if its marginal reserve ratio were 3 percent. clearing balance allowance. Deficiency charges customer.
TABLE 9.—CHECK 21 PRODUCT PENETRATION RATES 43

[Percent] a
August 2006 August 2006

2005 year-to-date actual
Deposit ......................................................................................................................................... 1.9 10.3 16.6

FedForward .......................................................................................................................... 1.6 9.4 15.5
Paper to Check 21 ............................................................................................................... 0.3 0.9 1.0
Presentment ................................................................................................................................. 0.0 2.2 4.8
FedReceipt ........................................................................................................................... 0.0 0.1 0.1
FedReceipt Plus ................................................................................................................... 0.0 2.1 4.7
Return:
FedReturn ............................................................................................................................. 3.7 14.5 21.4
a Deposit and presentment statistics are calculated as a percentage of total forward collection volume. Return statistics are calculated as a per-
centage of total return volume.
For full-year 2006, the Reserve Banks Through August, paper forward- The Reserve Banks estimate that paper
estimate that paper forward-collection collection volume has decreased 16.6 return volume will decline 21.2 percent
volume will decline 17.1 percent percent compared with the same period for the full year compared with a
compared with a budgeted decline of in 2005. Through August, paper return budgeted decline of 31.7 percent.
14.0 percent as more volume is check volume has decreased 17.5
deposited electronically (see table 10). percent from the same period in 2005.
TABLE 10.—PAPER CHECK PRODUCT VOLUME CHANGES

[Percent]
Actual change
Budgeted Estimated
through
2006 change 2006 change
August 2006
Total forward collection ................................................................................................................ ¥14.0 ¥16.6 ¥17.1

Returns ........................................................................................................................................ ¥31.7 ¥17.5 ¥21.2
2. 2007 Pricing—In 2007, the Reserve offices will be offset by ongoing cost by a projected increase in Check 21
Banks project that the check service will savings associated with projected volumes (see table 11). The Reserve
recover 101.5 of total expenses and declines in paper-check volume and Banks project that FedForward volume
targeted ROE. efficiency improvements at will increase 97.1 percent, FedReturn
Revenue is projected to be $784.3 restructuring sites. These cost volume will increase 112.3 percent and
million, a decline of 6.2 percent reductions should enable the Reserve FedReceipt Plus volume will increase
compared with the 2006 estimate. This Banks to maintain full cost recovery. A 342.8 percent. The Reserve Banks’
decline is driven by a $121.7 million key driver in the reduction of local projected increase in Check 21 volume
drop in paper check fee revenue that is check costs is the planned restructuring will result in a 49.5 percent increase in
partially offset by a $52.7 million of four more check-processing sites by
Check 21 product revenue to about $159
increase in Check 21 fee revenue. the second quarter of 2008.44
Total expenses for the check service The Reserve Banks project that paper- million. Board and Reserve Bank staff
are projected to be $709.9 million, check volume for forward products will believe that the key to realizing Check
representing a $0.9 million decline. decrease 24.0 percent, volume for return 21 cost efficiencies for the System
Increases in the pension costs and one- products will decrease 21.3 percent, and continues to be the widespread
time expenses associated with the volume for payor bank products will acceptance of electronic check
Check 21 initiative and the decrease 5.5 percent. These expected presentments by paying banks.
consolidation of check-processing volume declines will be partially offset
TABLE 11.—CHECK 21 VOLUME

2007 Budg- Growth from
eted volume 2006 estimate
(millions of (percent)
items)
FedForward .............................................................................................................................................................. 2,636.4 97.1

FedReturn ................................................................................................................................................................ 44.7 112.3
FedReceipt Plus ...................................................................................................................................................... 1,686.8 342.8
44 In February 2003, the Reserve Banks to thirty-two. The Reserve Banks announced further restructurings in early 2008, the Reserve Banks will
announced an initiative to reduce the number of rounds of restructurings in August 2004, May 2005, have eighteen check processing sites.
sites at which they process checks from forty-five and May 2006. By the end of these announced
In 2007, the Reserve Banks will Reserve Banks will decrease 12.5 The primary risks to meeting the
continue to encourage the adoption of percent the price for Check 21 items that Reserve Banks’ budgeted 2007 cost
electronic check collection and are presented electronically, and recovery are higher-than-expected
presentment alternatives through price increase 3.1 percent the price for Check declines in paper check volume and
increases to paper-check products and 21 items that are presented as substitute slower-than-expected adoption by
price reductions for strategic electronic checks. In addition, the Reserve Banks paying banks of FedReceipt products, as
products. The price increases for paper will offer a $0.003 discount per check the manual processes associated with
products generally are distributed across presented through FedReceipt products printing substitute checks and
most product categories, with generally to further encourage their adoption. preventing duplicate checks from
higher price increases for nonstrategic This discount will be applied to fees for entering the processing environment
product lines. The Reserve Banks also checks deposited with the Reserve
will exert upward pressure on staffing
will continue to narrow the price ranges Banks.
levels and costs. Competitive pressure
for similar products across the System. from direct electronic exchanges also
In addition, the Reserve Banks will offer TABLE 12.—2007 FEE CHANGES
poses a risk to the Reserve Banks’
depository institutions greater [Percent]
projected cost recovery. Other risks
incentives to deposit and accept checks
Product Fee change include unanticipated problems with
electronically. As the use of Check 21-
check office restructurings or other
related products increases, the prices of
paper products may be raised further to Paper check .......................... 6.0 major initiatives that may result in
Forward collection ......... 5.0 significant cost overruns.
encourage adoption of electronic check Returns .......................... 9.6
collection and presentment alternatives. Payor bank services ............. 8.1 F. FedACH Service—Table 13 below
For 2007, the Reserve Banks are Check 21: shows the 2005, 2006 estimate, and
targeting an overall price increase for FedForward (electronic 2007 budgeted cost recovery
endpoints) .................. ¥12.5 performance for the commercial
paper-check services of 6.0 percent, FedForward (substitute
including a 5.0 percent increase in FedACH service.
check endpoints) ........ 3.1
forward-check collection fees and a 9.6 FedReturn ...................... 0.0
percent increase in return-services fees FedReceipt products ..... a ¥$0.003
(see table 12). In addition, prices for a FedReceipt customers will receive a
payor bank services will increase 8.1 $0.003 discount per check presented. The dis-
percent. To encourage further the count can be used to offset fees for checks
adoption of electronic presentment, the they deposit with the Reserve Banks.
TABLE 13.—FEDACH PRO FORMA COST AND REVENUE PERFORMANCE

[$ Millions]
5
Recovery rate
3
1 2 4 after target
Year Net income
Revenue Total expense Target ROE ROE
(ROE) [1 ¥ 2] [1/(2 + 4)]
(percent)
2005 ..................................................................................... 87.4 72.2 15.2 10.0 106.4

2006 (estimate) .................................................................... 89.7 81.2 8.5 7.5 a 101.1
2007 (budget) ....................................................................... 99.9 89.5 10.4 8.8 101.6

a Including FAS 158, the estimated cost recovery for the FedACH service is 72.6%.
1. 2006 Estimate—The Reserve Banks fees at current levels with one digit rates. This expected growth is
estimate that the FedACH service will exception. The monthly subscription fee largely attributable to volume increases
recover 101.1 percent of total expenses for the Information Extract File will associated with electronic check
and targeted ROE, compared with the increase from $10 to $20.45 Pricing for conversion applications—including
budgeted recovery rate of 101.6 percent. this service has remained at $10 since checks converted at lockboxes or at the
The Reserve Banks expect to recover all its inception in 1998, and the higher point of purchase. In early 2007, ACH
actual and imputed expenses of price more accurately reflects the value rule changes will permit checks to be
providing FedACH services and earn net of the file to the receiving depository converted in processing centers or back
income of $8.5 million. Through institution. offices, spurring further growth in ACH
August, FedACH commercial The Reserve Banks project that the check conversion volume. The Reserve
origination volume is 11.9 percent FedACH service will recover 101.6 Banks expect FedACH commercial
higher than the same period last year. percent of total expenses and targeted origination volume to grow by 12.0
For full-year 2006, the Reserve Banks ROE in 2007. Total revenue is budgeted
percent. The primary risk to meeting the
estimate that FedACH originations will to increase $10.2 million from the 2006
Reserve Banks’ budgeted 2007 cost
grow 12.4 percent, compared with the estimate. Nationwide ACH volumes are
budgeted growth of 7.6 percent, because expected to continue growing at double recovery is the loss of large ACH
of greater-than-expected volume from originators to EPN. Total expenses are

Electronic Payments Network (EPN), the 45 The Information Extract File provides budgeted to increase $8.3 million over
other ACH operator. depository institutions with a file containing the 2006 estimate. The Reserve Banks
financial electronic data interchange information if have budgeted increased costs for
2. 2007 Pricing—The Reserve Banks their service providers cannot process and translate
will maintain processing and service such information.
product development and service
initiatives, such as FedACH risk G. Fedwire Funds and National 2007 budgeted cost recovery
management services. Settlement Services—Table 14 below performance for the Fedwire Funds and
shows the 2005, 2006 estimate, and National Settlement Services.
TABLE 14.—FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES PRO FORMA COST AND REVENUE PERFORMANCE
[$ Millions]
5
Recovery rate
3
1 2 4 after target
Year Net income
Revenue Total expense Target ROE ROE
(ROE) [1 ¥ 2] [1/(2 + 4)]
(percent)
2005 ..................................................................................... 67.3 55.2 12.1 7.9 106.7

2006 (estimate) .................................................................... 71.3 59.7 11.6 5.6 a 109.1
2007 (budget) ....................................................................... 72.7 64.7 8.0 6.3 102.3

a Including FAS 158, the estimated cost recovery for the Fedwire Funds and National Settlement Services is 78.6%.
1. 2006 Estimate—The Reserve Banks they lose market share to CHIPS, their Services to recover 102.3 percent of total
estimate that the Fedwire Funds and primary competitor. With respect to the expenses and targeted ROE. The Reserve
National Settlement Services will National Settlement Service, the Reserve Banks project 2007 total revenue to
recover 109.1 percent of total expenses Banks estimate that the volume of increase $1.4 million compared with the
and targeted ROE, compared with a settlement entries processed during 2006 estimate. Total expenses for 2007
2006 budgeted recovery rate of 105.4 2006 will be 4.3 percent higher than the are budgeted to increase $5.0 million
percent. The greater-than-expected 2006 budget projection of flat growth. from the 2006 estimate primarily
recovery rate is primarily attributed to 2. 2007 Pricing—The Reserve Banks because of security and technology
will decrease the online transfer fee by investments, including the cost of
higher-than-expected electronic
one cent in all pricing tiers and to raise network modernization and
connection revenue and NICB, which
the surcharge for offline transfers from
offsets slightly lower-than-expected fee enhancements to resiliency. Online
$20 to $30. The one cent price reduction
revenue, as well as lower-than-budgeted volumes for 2007 are budgeted to
for online transfers should mitigate
operating costs. Through August 2006, remain flat compared with 2006
potential volume losses to CHIPS while
online funds volume was 1.2 percent estimates.
the offline surcharge increase is
higher than it was for the same period intended to provide incentives for H. Fedwire Securities Service—Table
last year. For full-year 2006, the Reserve offline customers to migrate to online 15 shows the 2005, 2006 estimate, and
Banks estimate that online funds access. 2007 budgeted cost recovery
volume will remain flat, compared with In 2007, the Reserve Banks expect the performance for the Fedwire Securities
a budgeted growth of 3.0 percent, as Fedwire Funds and National Settlement Service.46
TABLE 15.—FEDWIRE SECURITIES SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[$ Millions]
5
Recovery rate
1 2 3 Net income 4 after target
Year Revenue Total expense (ROE) [1 ¥ 2] Target ROE ROE
[1/(2 + 4)]
(percent)
2005 ..................................................................................... 21.3 17.4 3.8 2.9 104.7

2006 (estimate) .................................................................... 21.8 19.3 2.5 1.8 a 103.7
2007 (budget) ....................................................................... 23.3 20.9 2.4 2.0 101.6

a Including FAS 158, the estimated cost recovery for the Fedwire Securities Service is 65.1%.
1. 2006 Estimate—The Reserve Banks however, is partially offset by higher- budget projection. The lower-than-
estimate that the Fedwire Securities than-expected NICB revenue and lower- budgeted volume is due to a slowdown
Service will recover 103.7 percent of than-budgeted operating costs. Through in mortgage financing.
total expenses and targeted ROE, August 2006, online securities volume 2. 2007 Pricing—The Reserve Banks
compared with a 2006 budgeted was 3.3 percent lower than it was will increase the online transfer fee by
recovery rate of 105.6 percent. The during the same period last year. For two cents, increase the monthly
lower-than-budgeted recovery is full-year 2006, the Reserve Banks maintenance fee from $15 to $16, and
attributable to lower-than-expected fee estimate that online securities volume raise the offline transfer origination and
revenue. The shortfall in fee revenue, will be 3.0 percent lower than the 2006 receipt surcharge from $50 to $60. The
46 The Reserve Banks provide transfer services for this memorandum, consists of revenues, expenses, Banks assess a fee for the funds settlement
securities issued by the U.S. Treasury, federal and volumes associated with the transfer of all non- component of a Treasury securities transfer; this
government agencies, government-sponsored Treasury securities. For Treasury securities, the component is not treated as a priced service.
enterprises, and certain international institutions. U.S. Treasury assesses fees for the securities
The priced component of this service, reflected in transfer component of the service. The Reserve
increases will more closely align the fee and Fedwire functionality. Both minimizing the adverse effect on
and surcharges with the costs of FedLine Command and FedLine Direct competition.
providing these services. build upon the FedLine Advantage The Board believes that the 2007 fees,
The Reserve Banks project that the packages and include most accounting fee structures, or changes in service will
Fedwire Securities Service will recover information services. The packaging of not have a direct and material adverse
101.6 percent of total expense and services will allow the Reserve Banks to effect on the ability of other service
targeted ROE in 2007. Total revenue is eliminate many of the discrete fees providers to compete effectively with
budgeted to increase $1.5 million from associated with electronic access and the Reserve Banks in providing similar
the 2006 estimate. Total expenses are accounting information services, such as services. The changes should permit the
expected to increase $1.6 million from setup fees, individual subscriber fees, Reserve Banks to earn an ROE that is
the 2006 estimate. The Reserve Banks and accounting report fees. The seven comparable to overall market returns.
continue to invest in new technologies electronic access packages were
to migrate the Fedwire Securities developed based on current usage FEDACH SERVICE 2007 FEE
Service applications to a distributed patterns and market studies. SCHEDULE
processing platform. Online and offline In addition to the packaging of [Effective January 2, 2007. Bold indicates
securities volumes in 2007 are projected electronic access and accounting changes from 2006 prices]
to be unchanged against 2006 estimates. information services, the Reserve Banks
I. Electronic Access —The Reserve will offer other changes to electronic Fee
Banks allocate the costs and revenues access pricing for 2007. In particular,
associated with electronic access to the the Reserve Banks will begin charging Origination (per item or
Reserve Banks’ priced services.47 There $15 per month for FedMail E-mail for record): 50
are currently four types of electronic customers who only use the FedMail E- Items in small files ......... $0.0030
access channels through which Items in large files .......... 0.0025
mail channel to access the Reserve
Addenda record ............. 0.0010
customers can access the Reserve Banks’ Banks’ priced services. Customers who Input file processing fee (per 2.50
priced services: FedPhone, FedMail, access Reserve Banks’ priced services file):.
FedLine, and Computer Interface through a FedLine connection will Receipt (per item or
(mainframe to mainframe).48 For 2007, receive FedMail E-mail as part of their record): 51
the Reserve Banks will make changes to packaged solution. FedMail Fax will Item ................................ 0.0025
simplify the electronic access pricing increase from $15 to $25 and will be Addenda record ............. 0.0010
structure by offering packaged solutions offered only as a premium option. The Risk Product:
that include electronic access and Reserve Banks also will increase fees on Risk service subscription 20.00/RTN/
accounting information services and FedLine Direct customers. The fee month
eliminating a number of discrete service Risk origination moni- 15.00/set of
increases will be used, in part, to toring criteria. criteria/
fees. recover the costs of building and month
The Reserve Banks will offer seven deploying the new Internet Protocol- Risk origination moni- 0.0025/batch
electronic access packages that are based FedLine Direct access channel. toring batch.
supplemented by a number of premium FedLine Direct and the access channel Monthly fee (per routing num-
(or à la carte) access and accounting that it is replacing, Computer Interface, ber):
information options. The first package are used by high volume customers, Account servicing fee 52 25.00
provides access to information services which are typically the largest FedACH settlement 53 .... 20.00
through FedMail E-mail. The next two depository institutions. Information extract file ... 20.00
packages are FedLine Web packages, FedLine Web origination re- 0.30
with three or five subscribers, that offer II. Analysis of Competitive Effect turns and notification of
access to basic information and check change (NOC) fee: 54.
All operational and legal changes Voice response returns/NOC 2.00
services. The next two packages are considered by the Board that have a fee: 55.
FedLine Advantage packages, with three substantial effect on payments system Non-electronic input/output
or five subscribers, that build upon the participants are subject to the fee: 56
FedLine Web packages and offer access competitive impact analysis described Tape input/output ........... 25.00
to FedACH and Fedwire services. The in the March 1990 policy, ‘‘The Federal Paper output .................. 15.00
final two packages are FedLine Reserve in the Payments System.’’ 49 Facsimile exception re- 15.00
Command and FedLine Direct, which Under this policy, the Board assesses turns/NOC 57.
allow for unattended connections over whether the proposed changes would Canadian cross-border fee:
the Internet or through dedicated Cross-border item sur- 0.039
have a direct and material adverse effect charge 58.
connections. FedLine Command is on the ability of other service providers Return received from 0.77
designed for FedACH functionality, to compete effectively with the Federal Canada 59.
while FedLine Direct, which is the Reserve in providing similar services Same-day recall of item 4.00
replacement channel for Computer because of differing legal powers or at receiving gateway
Interface customers, has both FedACH constraints or because of a dominant operator.
market position deriving from such legal Same-day recall of item 7.00
47 Certain electronic access fees are recorded as differences. If the change creates such not at receiving gate-
recoveries that offset the cost of providing these
an effect, the Board must further way operator.
services. These fees are for ancillary services, such Trace of item at receiv- 3.50
as training and vendor pass-through charges. evaluate the change to assess whether ing gateway.
Therefore, these fees are not listed in the electronic its benefits—such as contributions to Trace of item not at re- 5.00
access 2007 fee schedule below. payment system efficiency, payment
48 FedPhone, FedMail, and FedLine are registered

ceiving gateway.
system integrity, or other Board Mexico service fee:
servicemarks of the Reserve Banks. These
connections may also be used to access nonpriced objectives—can be retained while Cross-border item sur- 0.67
services provided by the Reserve Banks. FedPhone charge 58.
is a free access option. In 2007, Computer Interface 49 Federal Reserve Regulatory Service (FRRS) 9– Return received from 0.69
will become part of the FedLine Direct package. 1558. Mexico 59.
FEDACH SERVICE 2007 FEE FEDACH SERVICE 2007 FEE FEDACH SERVICE 2007 FEE
SCHEDULE—Continued SCHEDULE—Continued SCHEDULE—Continued
[Effective January 2, 2007. Bold indicates [Effective January 2, 2007. Bold indicates [Effective January 2, 2007. Bold indicates
changes from 2006 prices] changes from 2006 prices] changes from 2006 prices]
Fee Fee Fee
Item trace ....................... 11.50 The Netherlands ..... 2.00 The Netherlands ..... 5.00
Transatlantic service fee: Switzerland ............. 2.00 Switzerland ............. 5.00
Cross-border item sur- United Kingdom ...... 2.00 United Kingdom ...... 8.00
charge 58. Return received 59.
Austria ..................... 2.00 Austria ..................... 5.00
Germany ................. 2.00 Germany ................. 8.00
FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2007 FEE SCHEDULE

[Effective January 2, 2007. Bold indicates changes from 2006 prices.]
Fee
Fedwire Funds Service
Basic volume-based transfer fee (originations and receipts).

Per transfer for the first 2,500 transfers per month ..................................................................................................................... $0.29
Per transfer for additional transfers up to 80,000 per month ...................................................................................................... 0.19
Per transfer for every transfer over 80,000 per month ................................................................................................................ 0.09
Surcharge for offline transfers (originations and receipts) .................................................................................................................. 30.00
National Settlement Service
Basic :
Settlement entry fee ..................................................................................................................................................................... $0.80
Settlement file fee ......................................................................................................................................................................... 14.00
Surcharge for offline file origination ..................................................................................................................................................... 25.00
Minimum monthly charge (account maintenance) 60 ........................................................................................................................... 60.00
Special settlement arrangements 61.
Fee per day .................................................................................................................................................................................. 100.00
FEDWIRE SECURITIES SERVICE 2007 FEDWIRE SECURITIES SERVICE 2007

FEE SCHEDULE (NON-TREASURY SE- FEE SCHEDULE (NON-TREASURY SE-
FEDWIRE SECURITIES SERVICE 2007 CURITIES)—Continued CURITIES)—Continued
FEE SCHEDULE (NON-TREASURY SE- [Effective January 2, 2007. Bold indicates [Effective January 2, 2007. Bold indicates
CURITIES) changes from 2006 prices.] changes from 2006 prices.]
[Effective January 2, 2007. Bold indicates
changes from 2006 prices.] Fee Fee
Fee Offline transfer or rever- Issues maintained (per

sal originated or re- issue/per account) ..... 0.40
Basic transfer fee. ceived ......................... 60.00 Claim adjustment fee ............ 0.30
Transfer or reversal Monthly maintenance fees. Joint custody fee .................. 40.00
originated or received $0.34 Account maintenance
Surcharge. (per account) .............. 16.00
ELECTRONIC ACCESS 2007 FEE SCHEDULE

[Effective January 2, 2007 (unless otherwise indicated). Bold indicates changes from 2006 prices.]
Electronic Access Packages (monthly):

FedMail E-mail .......................................................................................... $15.00
FedLine Web W3 Includes: ...................................................................... 80.00
50 Small files contain fewer than 2,500 items and
53 The FedACH settlement fee is applied to any 58 This per-item surcharge is in addition to the
large files contain 2,500 or more items. These
routing number with activity during a month. This standard domestic origination and input file
origination fees do not apply to items that the
fee does not apply to routing numbers that use the processing fees.
Reserve Banks receive from the private-sector ACH 59 This per-item surcharge is in addition to the
operator. Reserve Banks for government transactions only.
51 Receipt fees do not apply to items that the
54 The fee includes the transaction and addenda standard domestic receipt fees.
60 This minimum monthly charge will only be
Reserve Banks send to the private-sector ACH fees.
55 The fee includes the transaction fee in addition
assessed if total settlement charges during a
operator. calendar month are less than $60.
52 The account servicing fee applies to routing to the voice response fee. 61 Special settlement arrangements use Fedwire
numbers that have received or originated FedACH 56 These services are offered for contingency
funds transfers to effect settlement. Participants in
transactions. Institutions that receive only U.S. situations only. arrangements and settlement agents are also
government transactions or that elect to use the 57 The fee includes the transaction fee in addition charged the applicable Fedwire funds transfer fee
other operator exclusively are not assessed the to the conversion fee. for each transfer into and out of the settlement
account servicing fee. account.
ELECTRONIC ACCESS 2007 FEE SCHEDULE—Continued

[Effective January 2, 2007 (unless otherwise indicated). Bold indicates changes from 2006 prices.]
FedMail E-mail.
FedLine Web with three individual subscriptions.
Service Charge Information (SCI).
Account Management Information (AMI).
* Premium options limited to FedMail Fax and electronic access
training.
FedLine Web W5 Includes: ...................................................................... 125.00
FedMail E-mail.
FedLine Web with five individual subscriptions.
Service Charge Information (SCI).
Account Management Information (AMI).
Cash Management System Basic—Own report only.
FedLine Advantage A3 Includes: ............................................................. 300.00
FedLine Web W3 package.
FedLine Advantage with three individual subscriptions.
Virtual Private Network (VPN) maintenance.
* Premium options limited to FedMail Fax and electronic access
training.
FedLine Advantage A5 Includes: ............................................................. 350.00
FedLine Web W5 package.
FedLine Advantage with five individual subscriptions.
VPN maintenance.
Intraday search download feature within AMI.
FedLine Command Includes: ................................................................... 650.00
FedLine Advantage A5 package.
One dedicated unattended connection over the Internet for ACH
services
Billing Data Format File (BDFF)
Intra-Day File
End-of-Day File (FIRD)
Statement of Account Spreadsheet File (SASF)
FedLine Direct D56, D256, DT1 Includes: ............................................... D56 $2,000.00, D256 $3,000.00, and DT1 $3,500.00
FedLine Command package
One dedicated unattended connection for Computer Interface or
FedLine Direct
Premium Options:
Electronic Access
FedMail Fax (monthly per fax line) .......................................................... 25.00
Additional subscribers package (each package contains 5 additional 75.00
subscribers).
Maintenance of additional VPN ................................................................ 50.00
Additional dedicated connections 62
Primary: ............................................................................................. 56K—750.00
256K—1,750.00
T1—2,250.00
Contingency: ...................................................................................... 56K—650.00
256K—1,650.00
T1—2,150.00
FedImage/Check 21 Large File Delivery .................................................. Various
Accounting Information Services
Cash Management System
Basic—Respondent and/or subaccount reports (per report/month) 7.00
Basic—Respondent/subaccount recap report (per month) ............... 35.00
Plus—Own report up to six times a day (per month) ....................... 50.00
Plus—Fewer than 10 respondent and/or subaccounts and SASF 100.00
(per month).
Plus—10 or more respondent and/or subaccounts and SASF (per 200.00
month).
End-of-day reconcilement file (FIRD) (per month) ................................... 100.00
Statement of account spreadsheet file (SASF) (per month) .................... 100.00
Intraday search download file (per month) .............................................. 100.00
Additional Information: For (EEOC) within 180 calendar days of the

By order of the Board of Governors of the additional information regarding the No alleged discriminatory action. If you are
Federal Reserve System, November 14, 2006. FEAR Act regulations, refer to 5 CFR alleging discrimination based on marital
Robert deV. Frierson, part 724, as well as the appropriate status or political affiliation, you may
Deputy Secretary of the Board.
offices within your agency (for example, file a written complaint with the U.S.
Office of Equal Opportunity and Civil Office of Special Counsel (OSC) (see
[FR Doc. 06–9333 Filed 11–21–06; 8:45 am]
Rights at 410–786–5110). Additional contact information below). In the
BILLING CODE 6210–01–P
information regarding Federal alternative (or in some cases, in
antidiscrimination, whistleblower addition), you may pursue a
protection, and retaliation laws can be discrimination complaint by filing a
DEPARTMENT OF HEALTH AND found at the EEOC Web site—http:// grievance through this Agency’s
HUMAN SERVICES www.eeoc.gov and the OSC Web site— administrative or negotiated grievance
http://www.osc.gov. procedures, if such procedures apply
Centers for Medicare & Medicaid SUPPLEMENTARY INFORMATION: and are available.
Services
I. Background III. Whistleblower Protection Laws
Notification and Obligation of the On May 15, 2002, the Congress A Federal employee who has
Federal Employee Antidiscrimination enacted the ’’Notification and Federal authority with respect to personnel
and Retaliation Act of 2002 Employee Antidiscrimination and actions must not take action against an
AGENCY: Centers for Medicare & Retaliation Act of 2002,’’ which is now employee or applicant because of
Medicaid Services (CMS), HHS. known as the No FEAR Act. One disclosure of information by that
purpose of the Act is to ‘‘require that individual that is reasonably believed to
ACTION: Notice. evidence violations of law, rule, or
Federal agencies be accountable for
SUMMARY: This notice announces the violations of antidiscrimination and regulation; gross mismanagement; gross
notification and obligation of the whistleblower protection laws.’’ In waste of funds; an abuse of authority; or
Federal Employee Antidiscrimination support of this purpose, the Congress a substantial and specific danger to
and Retaliation Act of 2002 (No Fear found that ‘‘agencies cannot be run public health or safety, unless
Act). This notice is in compliance with effectively if those agencies practice or disclosure of the information is
the notification provisions set forth in tolerate discrimination.’’ The No Fear specifically prohibited by law and the
Title II of the Notification and Federal Act also requires all agencies to provide information is specifically required by
Employee Antidiscrimination and this notice to Federal employees, former Executive order to be kept secret in the
Retaliation Act of 2002. The No FEAR Federal employees, and applicants for interest of national defense or the
Act requires that all Federal agencies Federal employment to inform conduct of foreign affairs. Retaliation
publish an initial notice in the Federal employees or applicants of the rights against an employee or applicant for
Register informing Federal employees, and protections available under the making a protected disclosure is
former Federal employees, and Federal antidiscrimination and prohibited by 5 U.S.C. 2302(b)(8). If you
applicants of the rights and protections whistleblower protection laws. believe that you have been the victim of
available to them under Federal whistleblower retaliation, you may file
II. Antidiscrimination Laws
antidiscrimination and whistleblower a written complaint (Form OSC–11)
A Federal agency cannot discriminate with the U.S. Office of Special Counsel
protection laws. against an employee or applicant with at 1730 M Street NW., Suite 218,
EFFECTIVE DATE: This notice is effective respect to the terms, conditions or Washington, DC 20036–4505 or online
on September 18, 2006. privileges of employment on the basis of through the OSC Web site—http://
FOR FURTHER INFORMATION CONTACT: race, color, religion, sex, national origin, www.osc.gov.
Arlene E. Austin, Director, Office of age, disability, marital status or political
Equal Opportunity and Civil Rights, at affiliation. Discrimination on these IV. Retaliation for Engaging in
(410) 786–5110 (voice), (410) 786–9549 bases is prohibited by one or more of the Protected Activity
(fax), or (410) 786–2456 (TTY); or Anita following statutes: 5 U.S.C. 2302(b) (1), A Federal agency cannot retaliate
Pinder, Special Assistant, Office of 29 U.S.C. 206(d), 29 U.S.C. 631, 29 against an employee or applicant
Equal Opportunity and Civil Rights, at U.S.C. 633a, 29 U.S.C. 791, and 42 because that individual exercises his or
(410) 786–5493 (voice), (410) 786–9549 U.S.C. 2000e–16. If you believe that you her rights under any of the Federal
(fax), or (410) 786–2456 (TTY) (These have been the victim of unlawful antidiscrimination or whistleblower
are not toll free numbers). discrimination on the basis of race, protection laws listed above. If you
Special Accomodations: This notice color, religion, sex, national origin, or believe that you are the victim of
also is available in the following disability, you must contact an Equal retaliation for engaging in protected
formats: Large print, audio tape, Employment Opportunity (EEO) activity, you must follow, as
electronic file on computer disk, and on counselor within 45 calendar days of appropriate, the procedures described in
CMS’s Web page http:// the alleged discriminatory action, or, in the Antidiscrimination Laws and
www.cms.hhs.gov. Requests for this the case of a personnel action, within 45 Whistleblower Protection Laws sections
notice in an alternative format should be calendar days of the effective date of the or, if applicable, the administrative or
made to CMS’s Office of Strategic action, before you can file a formal negotiated grievance procedures in
Operations and Regulatory Affairs, complaint of discrimination with this order to pursue any legal remedy.
Regulations Development Group at 1– Agency. See, for example, 29 CFR 1614.
If you believe that you have been the V. Disciplinary Actions
800–743–3951 (voice), 1–866–226–1819
(TTY), or (410) 786–3064 (fax) (The fax victim of unlawful discrimination on Under the existing laws, each agency
is not a toll free number). the basis of age, you must either contact retains the right, where appropriate, to
an EEO counselor as noted above or give discipline a Federal employee for
62 Network diversity supplemental charge of notice of intent to sue to the Equal conduct that is inconsistent with
$1,000 a month may apply in addition to these fees. Employment Opportunity Commission Federal Antidiscrimination and

Notice: Federal Reserve Bank Services: Priced Services and Electronic Access Private Sector Adjustment Factor and Fee Schedules (2007)

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67600 Federal Register / Vol. 71, No.

225 / Wednesday, November 22, 2006 / Notices

33313. Officer: Victor Thomas, President Individual).

2005 ................................................................. 994.7 834.7 160.0 103.0 106.1

Table 2 presents an overview of cost

TABLE 2.—PRICED SERVICES COST RECOVERY

Priced service 2005 2006 Budget 2006 Estimate a 2007 Budget b

All services ....................................................................................... 106.1 102.6 108.2 101.5

check fees for forward collection check

‘‘shareholder’’ does not refer to the actual member

(2) a ratio of Tier 1 capital to risk-weighted assets

priced services balance sheet is assumed to equal

D. Earnings Credits on Clearing clearing balances.39 The Reserve Banks

TABLE 8.—CHECK PRO FORMA COST AND REVENUE PERFORMANCE

2005 ..................................................................................... 817.5 688.7 128.7 82.0 106.1

2007 (budget) ....................................................................... 784.3 709.9 74.4 63.2 101.5

TABLE 9.—CHECK 21 PRODUCT PENETRATION RATES 43

August 2006 August 2006

Deposit ......................................................................................................................................... 1.9 10.3 16.6

TABLE 10.—PAPER CHECK PRODUCT VOLUME CHANGES

Total forward collection ................................................................................................................ ¥14.0 ¥16.6 ¥17.1

TABLE 11.—CHECK 21 VOLUME

FedForward .............................................................................................................................................................. 2,636.4 97.1

TABLE 13.—FEDACH PRO FORMA COST AND REVENUE PERFORMANCE

2005 ..................................................................................... 87.4 72.2 15.2 10.0 106.4

2007 (budget) ....................................................................... 99.9 89.5 10.4 8.8 101.6

of greater-than-expected volume from originators to EPN. Total expenses are

2005 ..................................................................................... 67.3 55.2 12.1 7.9 106.7

2007 (budget) ....................................................................... 72.7 64.7 8.0 6.3 102.3

2005 ..................................................................................... 21.3 17.4 3.8 2.9 104.7

2007 (budget) ....................................................................... 23.3 20.9 2.4 2.0 101.6

48 FedPhone, FedMail, and FedLine are registered

Fee Fee Fee

FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2007 FEE SCHEDULE

Fedwire Funds Service

Basic volume-based transfer fee (originations and receipts).

National Settlement Service

FEDWIRE SECURITIES SERVICE 2007 FEDWIRE SECURITIES SERVICE 2007

Fee Offline transfer or rever- Issues maintained (per

ELECTRONIC ACCESS 2007 FEE SCHEDULE

Electronic Access Packages (monthly):

ELECTRONIC ACCESS 2007 FEE SCHEDULE—Continued

Additional Information: For (EEOC) within 180 calendar days of the

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