Neither the Board nor the Reserve Banks receive appropriations from Congress. Therefore, they do not operate with tax revenues, but rather pay expenses out of earnings. Earnings of the Federal Reserve Banks are derived primarily from interest received on their holdings of U.S. government securities and the fees they charge to depository institutions for providing services.
We intend to bring the banking system in compliance with Basle 2 by 2007. In preparation, we are now requiring universal and commercial banks to formally set up a minimum internal credit risk rating system for the underwriting and ongoing administration of corporate credit exposures. This is embodied in Circular No.