[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Proposed Rules]
[Pages 69054-69055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33159]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Regulation D, Docket No. R-0956]


Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In conjunction with a final rule printed elsewhere in today's 
Federal Register, the Board of Governors of the Federal Reserve System 
is proposing to amend its Regulation D regarding reserve requirements 
of depository institutions issued pursuant to section 19 of the Federal 
Reserve Act, in order further to reduce regulatory burden and simplify 
and update requirements. This proposal would clarify the definition of 
``savings deposit,'' consistent with comments the Board received on its 
earlier proposal, and similarly clarify the definition of ``transaction 
account'' and conform it to the amended definition of ``savings 
deposit.'' This proposal is in accordance with the Board's policy of 
regular review of its regulations and the Board's review of its 
regulations under section 303 of the Riegle Community Development and 
Regulatory Improvement Act of 1994.

DATES: Comments must be received by February 4, 1997.

ADDRESSES: Comments should be directed to William W. Wiles, Secretary, 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue, NW., Washington, DC 20551, Attention: Docket No. 
R-0956, or delivered to Room B-2222, Eccles Building, between 8:45 a.m. 
and 5:15 p.m. Comments may be inspected in Room MP-500 between 9:00 
a.m. and 5:00 p.m. weekdays, except as provided in Sec. 261.8 of the 
Board of Governors' rules regarding availability of information, 12 CFR 
261.8.

FOR FURTHER INFORMATION CONTACT: Ann Owen, Economist, Division of 
Monetary Affairs (202/736-5671); Sue Harris, Economist, Division of 
Research and Statistics (202/452-3490); Rick Heyke, Staff Attorney, 
Legal Division (202/452-3688). For the hearing impaired only, 
Telecommunications Device for the Deaf (TDD), Earnestine Hill or 
Dorothea Thompson (202/452-3544).

SUPPLEMENTARY INFORMATION:

Background

    The Board of Governors of the Federal Reserve System (Board) 
published a notice of proposed rulemaking in the Federal Register on 
June 17, 1996 (61 FR 30545) that solicited comments on proposed 
amendments to its Regulation D, Reserve Requirements of Depository 
Institutions (12 CFR Part 204). The Board received nine comments 
suggesting that the Board clarify the definition of ``savings 
deposit,'' and a number of them also suggested that the Board rewrite 
the definitions of ``time deposit,'' ``demand deposit,'' and/or 
``transaction account.'' One commenter suggested the use of bullet 
points to distinguish limitations on transfers from exceptions to such 
limitations. Two commenters appended suggested language designed to 
clarify the definition of savings account, principally by shortening 
the sentences.
    In response to these comments, the Board is proposing to amend the 
definition of ``savings deposit'' in an effort to clarify it. The 
proposal similarly would amend the definition of ``transaction 
account'' to clarify it and to conform it to the amended definition of 
``savings deposit.'' The amendments are intended to be nonsubstantive 
and would codify certain Board and staff interpretations. For example, 
the proposal makes clear that a transfer ordered by messenger does 
count against the limitation on transfers applicable to savings 
accounts if the messenger is in the employ of, or acting as agent of, 
the depository institution. The proposal also clarifies that transfers 
from savings accounts to repay overdrafts do not benefit from the 
exception for transfers to repay loans and associated expenses at the 
same depository institution. The proposal distinguishes more clearly 
between transfers from savings accounts subject to both the 6 per month 
and the 3 per month limitations and those subject only to the 6 per 
month limitation by specifying that the 6 per month limitation applies 
to preauthorized transfers, telephone and data transmission orders, 
checks, drafts, debit cards and similar orders to the depository 
institution whether given directly to the depository institution by the 
depositor or delivered to the depository institution through and 
payable to third parties. In contrast, the 3 per month limitation 
applies to transfers made by check, draft, debit card, or similar order 
to the depository institution delivered through and payable to third 
parties. Home banking transfers remain subject to the six per month 
limitation.

Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires an 
agency to publish an initial regulatory flexibility analysis with any 
notice of proposed rulemaking. Two of the requirements of an initial 
regulatory flexibility analysis (5 U.S.C. 603(b))--a description of the 
reasons why action by the agency is being considered and a statement of 
the objectives of, and legal basis for, the proposed rule--are 
contained in ``Background'' above. The proposed rules require no 
additional reporting or recordkeeping requirements and do not overlap 
with other federal rules.
    Another requirement for the initial regulatory flexibility analysis 
is a

[[Page 69055]]

description of and, where feasible, an estimate of the number of small 
entities to which the proposed rule will apply. The proposal will apply 
to all depository institutions regardless of size.
    The amendments are burden-reducing. Therefore, the Board believes 
that the amendments will not have a significant adverse economic impact 
on a substantial number of small entities.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act notice of 1995 (44 
U.S.C. Ch. 3506; 5 CFR Part 1320, Appendix A.1), the Board has reviewed 
the rule under the authority delegated to the Board by the Office of 
Management and Budget. No collection of information pursuant to the 
Paperwork Reduction Act is contained in the rule.

List of Subjects in 12 CFR Part 204

    Banks, banking, Federal Reserve System, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Board proposes to 
amend part 204 of chapter II of title 12 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

    1. The authority citation for part 204 continues to read as 
follows:

    Authority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 
3105.

    2. Section 204.2 is amended as follows:
    a. Paragraphs (b)(2) and (b)(3)(ii)(A) are amended by removing 
``paragraph (d)(2) of this section'' and adding in its place 
``paragraph (d) of this section''.
    b. Paragraph (d) is revised.
    c. In the introductory text of paragraph (e) and in paragraphs 
(e)(2), (e)(3), and (e)(4), all references to ``paragraph (d)(2) of 
this section'' are revised to read ``paragraph (d) of this section''.
    d. Paragraph (e)(4) is further amended by removing ``another 
account of the depositor at the same institution (including transaction 
account)'' and adding in its place ``another account of the depositor 
(including a transaction account)'', and by removing the third and 
fourth sentences in their entirety. The revision reads as follows:


Sec. 204.2  Definitions.

* * * * *
    (d)(1) Savings deposit means a deposit or account--
    (i) With respect to which the depositor may be (but is not 
ordinarily) required by the depository institution to give written 
notice of an intended withdrawal not less than seven days before 
withdrawal is made;
    (ii) That is not payable on a specified date, or after a specified 
period of time after the date of deposit;
    (iii) From which the depositor is limited to no more than six 
transfers per month (or similar period of at least four weeks) to 
another account (including a transaction account) of the depositor or 
to a third party, by means of a preauthorized transfer, a telephone or 
data transmission order, or a check, draft, debit card, or similar 
order to the depository institution whether given directly to the 
depository institution by the depositor or delivered to the depository 
institution through and payable to third parties; and
    (iv) From which no more than three of such six transfers may be 
made by check, draft, debit card, or similar order to the depository 
institution by the depositor delivered to the depository institution 
through and payable to third parties.4
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    \4\ In order to ensure that no more than the permitted number of 
withdrawals or transfers are made, for an account to come within the 
definition in paragraph (d) of this section, a depository 
institution must either:
    (a) Prevent withdrawals or transfers of funds from this account 
that are in excess of the limits established by paragraph (d) of 
this section, or
    (b) Adopt procedures to monitor those transfers on an ex post 
basis and contact customers who exceed the established limits on 
more than an occasional basis.
    For customers who continue to violate those limits after they 
have been contacted by the depository institution, the depository 
institution must either close the account and place the funds in 
another account that the depositor is eligible to maintain, or take 
away the transfer and draft capacities of the account.
    An account that authorizes withdrawals or transfers in excess of 
the permitted number is a transaction account regardless of whether 
the authorized number of transactions are actually made. For 
accounts described in paragraph (d) of this section, the institution 
at its option may use, on a consistent basis, either the date on the 
check, draft, or similar item, or the date the item is paid in 
applying the limits imposed by that section.
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    (2) The limitations in paragraph (d)(1) of this section do not 
apply to:
    (i) Transfers from a savings account for the purpose of repaying 
loans (other than overdrafts on a transaction account) and associated 
expenses at the same depository institution (as originator or 
servicer);
    (ii) Transfers of funds from a savings account to another account 
of the same depositor at the same institution when the transfers are 
requested by mail, by messenger (not in the employ of or acting as 
agent of the depository institution), at an automated teller machine, 
or in person at an office of the depository institution;
    (iii) Withdrawals from a savings account when such withdrawals are 
requested by mail, by messenger (not in the employ of, or acting as 
agent of, the depository institution), or at an automated teller 
machine, or in person at an office of the depository institution; or
    (iv) Withdrawals requested by telephone or data transmission and 
paid by means of a check mailed to the depositor.
    (3)(i) A preauthorized transfer means any transfer from the account 
of the depositor by the depository institution to pay a third party:
    (A) Upon written or oral instruction to the institution (including 
any order received through an automated clearing house (ACH)); or
    (B) At a predetermined time or on a fixed schedule.
    (ii) A withdrawal means any payment to the depositor.
    (4) Savings deposit does not include funds deposited to the credit 
of the depository institution's own trust department where the funds 
involved are utilized to cover checks or drafts. Such funds are 
transaction accounts.
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, December 24, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-33159 Filed 12-30-96; 8:45 am]
BILLING CODE 6210-01-P