[Federal Register Volume 85, Number 82 (Tuesday, April 28, 2020)]
[Rules and Regulations]
[Pages 23445-23448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09044]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
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  Federal Register / Vol. 85, No. 82 / Tuesday, April 28, 2020 / Rules 
and Regulations  

[[Page 23445]]



FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1715; RIN 7100-AF 89]


Regulation D: Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Interim final rule, request for public comment.

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SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is amending its Regulation D (Reserve Requirements of 
Depository Institutions) to delete the numeric limits on certain kinds 
of transfers and withdrawals that may be made each month from ``savings 
deposits.'' The amendments are intended to allow depository institution 
customers more convenient access to their funds and to simplify account 
administration for depository institutions. There are no mandatory 
changes to deposit reporting associated with the amendments.

DATES: Effective date: This rule is effective on April 24, 2020.
    Comment date: Comments must be received on or before June 29, 2020.
    Applicability date: The changes to the numeric limits on certain 
kinds of transfers and withdrawals that may be made each month from 
accounts characterized as ``savings deposits'' were applicable on April 
23, 2020.

ADDRESSES: You may submit comments, identified by Docket Number R-1715; 
RIN 7100- AF 89, by any of the following methods:
     Agency Website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: [email protected]. Include the 
docket number and RIN in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551.
    All public comments are available from the Board's website at 
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons or to remove 
personally identifiable information at the commenter's request. 
Accordingly, comments will not be edited to remove any identifying or 
contact information. Public comments may also be viewed electronically 
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006, 
between 9:00 a.m. and 5:00 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special 
Counsel (202-452-3565), Legal Division, or Matthew Malloy (202-452-
2416), or Heather Wiggins (202-452-3674), Division of Monetary Affairs; 
for users of Telecommunications Device for the Deaf (TDD) only, contact 
202-263-4869; Board of Governors of the Federal Reserve System, 20th 
and C Streets NW, Washington, DC 20551.

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background

    Section 19 of the Federal Reserve Act (the ``Act'') authorizes the 
Board to impose reserve requirements on certain types of deposits and 
other liabilities of depository institutions solely for the purpose of 
implementing monetary policy. Specifically, section 19(b)(2) of the Act 
(12 U.S.C. 461(b)(2)) requires each depository institution to maintain 
reserves against its transaction accounts, nonpersonal time deposits, 
and Eurocurrency liabilities, as prescribed by Board regulations. 
Reserve requirement ratios for nonpersonal time deposits and 
Eurocurrency liabilities have been set at zero percent since 1990 and, 
as discussed below, were recently set to zero percent for transaction 
accounts.
    Section 11(a)(2) of the Act authorizes the Board to require any 
depository institution ``to make, at such intervals as the Board may 
prescribe, such reports of its liabilities and assets as the Board may 
determine to be necessary or desirable to enable the Board to discharge 
its responsibility to monitor and control monetary and credit 
aggregates.'' \1\ These provisions are specifically implemented in the 
computation and maintenance provisions of Regulation D (12 CFR 204.4 
and 204.5, respectively) and in the Board's ``FR 2900'' series of 
deposit reports (``FR 2900 reports'').\2\
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    \1\ 12 U.S.C. 248(a).
    \2\ ``Report of Transaction Accounts, Other Deposits, and Vault 
Cash--FR 2900'' (OMB Number 7100-0087). See, e.g., FR 2900 
(Commercial Banks) at https://www.federalreserve.gov/reportforms/forms/FR_2900cb20180630_f.pdf.
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    Regulation D distinguishes between reservable ``transaction 
accounts'' and non-reservable ``savings deposits'' based on the ease 
with which the depositor may make transfers (payments to third parties) 
or withdrawals (payments directly to the depositor) from the account. 
Prior to this interim final rule, Regulation D limited the number of 
certain convenient kinds of transfers or withdrawals that an account 
holder may make from a ``savings deposit'' to not more than six per 
month (six transfer limit).\3\ Similarly, prior to this interim final 
rule, Regulation D also imposed requirements on depository institutions 
for either preventing transfers in excess of six transfer limit or for 
monitoring such accounts ex post for violations of the limit.\4\
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    \3\ ``Convenient'' transfers or withdrawals for this purpose 
include preauthorized or automatic transfers (such as overdraft 
protection transfers or arranging to have bill payments deducted 
directly from the depositor's savings account), telephonic transfers 
(made by the depositor telephoning or sending a fax or online 
instruction to the bank and instructing the transfer to be made), 
and transfers by check, debit card, or similar order payable to 
third parties. 12 CFR 204.2(d)(2).
    \4\ 12 CFR 204.2(d)(2) note 4 explains that 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 of ``savings 
deposit,'' a depository institution must either, prevent withdrawals 
or transfers of funds from this account that are in excess of the 
limits established by Sec.  204.2(d)(2), or to adopt procedures to 
monitor those transfers on an ex post basis and contact customers 
who exceed the established limits on more than 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 is actually made. For accounts described in Sec.  
204.2(d)(2) 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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[[Page 23446]]

II. Discussion

A. Recent Developments

    In January 2019, the FOMC announced its intention to implement 
monetary policy in an ample reserves regime. Reserve requirements do 
not play a role in this operating framework. In light of the shift to 
an ample reserves regime, the Board announced that, effective March 26, 
2020, reserve requirement ratios were reduced to zero percent. This 
action eliminated reserve requirements for thousands of depository 
institutions and helped to support lending to households and 
businesses.
    As a result of the elimination of reserve requirements on all 
transaction accounts, the retention of a regulatory distinction in 
Regulation D between reservable ``transaction accounts'' and non-
reservable ``savings deposits'' is no longer necessary. In addition, 
financial disruptions arising in connection with the novel coronavirus 
situation have caused many depositors to have a more urgent need for 
access to their funds by remote means, particularly in light of the 
closure of many depository institution branches and other in-person 
facilities.

B. Interim Final Rule

    Because of the elimination of reserve requirements and because of 
financial disruptions related to the novel coronavirus, the Board is 
amending Regulation D, effective immediately, to delete the six 
transfer limit from the ``savings deposit'' definition. This interim 
final rule includes deletion of the provisions in the ``savings 
deposit'' definition that require depository institutions either to 
prevent transfers and withdrawals in excess of the limit or to monitor 
savings deposits ex post for violations of the limit. The interim final 
rule also makes conforming changes to other definitions in Regulation D 
that refer to ``savings deposit'' as necessary.
    The interim final rule allows depository institutions immediately 
to suspend enforcement of the six transfer limit and to allow their 
customers to make an unlimited number of convenient transfers and 
withdrawals from their savings deposits. The interim final rule 
permits, but does not require, depository institutions to suspend 
enforcement of the six transfer limit. The interim final rule also does 
not require any changes to the deposit reporting practices of 
depository institutions. Additional information on the impact of the 
interim final rule is set forth in the next section.

C. Impact of the Interim Final Rule

    The Board anticipates that the adoption of the interim final rule 
could give rise to questions from depository institutions and their 
customers regarding the impact of the interim final rule on access to 
funds, account agreements, reporting practices, and other related 
matters. Some anticipated questions are set forth below, together with 
brief answers, in a ``frequently asked questions'' (FAQ) format. 
Concurrently with the adoption of the interim final rule, the Board is 
setting forth these FAQs on its existing ``Savings Deposit Frequently 
Asked Questions'' web page \5\ and will update that page with FAQ 
revisions and additional FAQs as needed.
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    \5\ https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm.
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    Q.1. Does the interim final rule require depository institutions to 
suspend enforcement of the six convenient transfer limit on accounts 
classified as ``savings deposits''?
    A.1. No. The interim final rule permits depository institutions to 
suspend enforcement of the six transfer limit, but it does not require 
depository institutions to do so.
    Q.2. May depository institutions continue to report accounts as 
``savings deposits'' on their FR 2900 deposit reports even after they 
suspend enforcement of the six transfer limit on those accounts?
    A.2. Yes. Depository institutions may continue to report these 
accounts as ``savings deposits'' on their FR 2900 reports after they 
suspend enforcement of the six transfer limit on those accounts.
    Q.3. If a depository institution suspends enforcement of the six 
transfer limit on a ``savings deposit,'' may the depository institution 
report the account as a ``transaction account'' rather than as a 
``savings deposit''?
    A.3. Yes. If a depository institution suspends enforcement of the 
six transfer limit on a ``savings deposit,'' the depository institution 
may report that account as a ``transaction account'' on its FR 2900 
reports. A depository institution may instead, if it chooses, continue 
to report the account as a ``savings deposit.''
    Q.4. Does the interim final rule have any impact on the 
``reservation of right'' provisions set forth in Sec.  204.2(d)(1) of 
Regulation D? \6\
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    \6\ The ``reservation of right'' refers to the provisions of 
Sec.  204.2(d)(1) of Regulation D where a depository institution is 
not required to impose seven days' advance notice of withdrawals 
from ``savings deposits'' but reserves the right at any time to do 
so. Section 204.2(d)(1) provides that savings deposit means a 
deposit or account with respect to which the depositor is not 
required by the deposit contract but may at any time be required by 
the depository institution to give written notice of an intended 
withdrawal not less than seven days before withdrawal is made, and 
that is not payable on a specified date or at the expiration of a 
specified time after the date of deposit. The term savings deposit 
includes a regular share account at a credit union and a regular 
account at a savings and loan association. 12 CFR 204.2(d)(1).
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    A.4. No. The interim final rule does not have any impact on Sec.  
204.2(d)(1) of Regulation D. The ``reservation of right'' continues to 
be a part of the definition of ``savings deposit'' under the interim 
final rule.
    Q.5. If a depository institution suspends enforcement of the six 
transfer limit on a ``savings deposit,'' is the depository institution 
required to change the way that interest on the account is calculated 
or reported?
    A.5. No. The interim final rule does not require a depository 
institution to change the way it calculates or reports interest on an 
account where the depository institution has suspended enforcement of 
the six transfer limit.
    Q.6. Suppose a depository institution has account agreements with 
its ``savings deposit'' customers that require the depository 
institution to enforce the six transfer limit. Suppose further that the 
depository institution would like to amend those account agreements so 
that the depository institution no longer has a contractual obligation 
to enforce the six transfer limit on its ``savings deposit'' accounts. 
Does the interim final rule require the depository institution to amend 
those agreements in any particular way?
    A.6. No. The interim final rule does not specify the manner in 
which depository institutions that choose to amend their account 
agreements may do so.
    Q.7. If a depository institution chooses to suspend enforcement of 
the six transfer limit on a ``savings deposit,'' must the depository 
institution change the name of the account or product if the account or 
product name has the words ``savings'' or ``savings deposit'' in it?
    A.7. No. The interim final rule does not require depository 
institutions to change the name of any accounts or products that have 
the words ``savings'' or ``savings deposit'' in the name of the account 
or product.
    Q.9. May depository institutions suspend enforcement of the six 
transfer limit on a temporary basis, such as for six months?
    A.9. Yes.
    Q.10. Suppose that a depository institution currently has policies 
or provisions in their savings deposit account agreements pursuant to 
which

[[Page 23447]]

the depository institution charges fees to savings deposit customers 
for transfers and withdrawals that exceed the six transfer limit. May a 
depository institution that suspends enforcement of the six transfer 
limit continue to charge these fees when savings deposit customers make 
seven or more convenient transfers and withdrawals in a month?
    A.10. Regulation D does not require or prohibit depository 
institutions from charging their customers fees for transfers and 
withdrawals in violation of the six transfer limit. Accordingly, the 
deletion of the six transfer limit does not have a direct impact on the 
policies or account agreements of depository institutions that charge 
such fees to their customers.

III. Request for Comment

    The Board seeks comment on all aspects of this interim final rule. 
In particular, the Board seeks comment on the considerations that may 
lead depository institutions to choose, or to be required, to retain a 
numeric limit on the number of convenient transfers that may be made 
each month from a savings deposit.

IV. Administrative Procedure Act

    In accordance with the Administrative Procedure Act (``APA'') 
section 553(b) (5 U.S.C. 553(b)), the Board finds, for good cause, that 
providing notice and an opportunity for public comment before the 
effective date of this rule would be contrary to the public interest. 
In addition, pursuant to APA section 553(d) (5 U.S.C. 553(d)), the 
Board finds good cause for making this amendment effective without 30 
days advance publication. The amendments relieve depository 
institutions of a regulatory burden and permit all customers, 
particularly those impacted by the coronavirus situation, to have 
increased immediate access to their funds. Implementation of the rule 
without 30 days advance publication will help both depository 
institutions and their customers to deal with the unique pressures of 
the coronavirus situation and to alleviate the adverse impacts it has 
caused. The Board believes that any delay in implementing the rule 
would prove contrary to the public interest. The Board is requesting 
comment on all aspects of the rule and will make any changes that it 
considers appropriate or necessary after review of any comments 
received.

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires an agency that is issuing a 
final rule to prepare and make available a regulatory flexibility 
analysis that describes the impact of the final rule on small entities. 
5 U.S.C. 603(a). The Regulatory Flexibility Act provides that an agency 
is not required to prepare and publish a regulatory flexibility 
analysis if the agency certifies that the final rule will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 605(b).
    Pursuant to section 605(b), the Board certifies that this interim 
final rule will not have a significant economic impact on a substantial 
number of small entities. The interim final rule eliminates the numeric 
limits on certain types of transfers that may be made each month from a 
``savings deposit.'' All depository institutions, including small 
depository institutions, will benefit from the elimination of the 
transfer limits. There are no new reporting, recordkeeping, or other 
compliance requirements associated with the interim final rule.

VI. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (44 U.S.C. 3506; 5 
CFR 1320 Appendix A.1), the Board has reviewed the interim final rule 
under authority delegated to the Board by the Office of Management and 
Budget.
    The interim final rule affects the following Board information 
collections: The Reports of Deposits (FR 2900 series; OMB Control 
Number 7100-0087); the Financial Statements for Holding Companies (FR 
Y-9 reports; OMB Control Number 7100-0128); and the Consolidated Report 
of Condition and Income for Edge and Agreement Corporations (FR 2886b; 
OMB Control Number 7100-0086). The Board has temporarily revised the 
instructions for the FR 2900 series, the FR Y-9 reports, and the FR 
2886b to reflect accurately aspects of the interim final rule.
    The interim final rule also affects the following Federal Financial 
Institutions Examination Council (``FFIEC'') reports, which are shared 
by the Board, the Federal Deposit Insurance Corporation (``FDIC''), and 
the Office of the Comptroller of the Currency (``OCC'') (together, the 
agencies): The Consolidated Reports of Condition and Income (``Call 
Reports'') (Board OMB Control Number: 7100-0036; FDIC OMB Control 
Number 3064-0052; and OCC OMB Control Number 1557-0081) and the Report 
of Assets and Liabilities of U.S. Branches and Agencies of Foreign 
Banks (FFIEC 002; OMB Control Number: 7100-0032). The agencies have 
determined that there are revisions that should be made to the affected 
FFIEC reports as a result of this rulemaking. Although there may be 
substantive changes to the affected FFIEC reports that result from the 
revised definition of the ``savings deposit'' definition in Regulation 
D, the changes should be minimal and result in a zero net change in 
hourly burden. Submissions will, however, be made by the agencies to 
OMB.
    The changes to the affected Board and FFIEC reports and their 
instructions will be addressed in a separate Federal Register notice.

Plain Language

    Section 772 of the Gramm-Leach-Bliley Act requires the Board to use 
``plain language'' in all proposed and final rules. In light of this 
requirement, the Board has sought to present the interim final rule in 
a simple and straightforward manner. The Board invites comment on 
whether the Board could take additional steps to make the rule easier 
to understand.

List of Subjects in 12 CFR Part 204

    Banks, Banking, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Board is amending 12 
CFR part 204 as follows:

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

0
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.


0
2. In Sec.  204.2:
0
a. Remove paragraph (c)(1)(ii);
0
b. Redesignate paragraphs (c)(1)(iii) and (iv) as paragraphs (c)(1)(ii) 
and (iii); and
0
c. Revise paragraphs (d)(2), (e) introductory text, and (e)(2) through 
(4) and (6).
    The revisions read as follows:


Sec.  204.2   Definitions.

* * * * *
    (d) * * *
    (2) The term ``savings deposit'' also means: A deposit or account, 
such as an account commonly known as a passbook savings account, a 
statement savings account, or as a money market deposit account (MMDA), 
that otherwise meets the requirements in paragraph (d)(1) of this 
section and from which, under the terms of the deposit contract or by 
practice of the depository institution, the depositor may be permitted 
or authorized to make transfers and withdrawals to another

[[Page 23448]]

account (including a transaction account) of the depositor at the same 
institution or to a third party, regardless of the number of such 
transfers and withdrawals or the manner in which such transfers and 
withdrawals are made.
* * * * *
    (e) Transaction account means a deposit or account from which the 
depositor or account holder is permitted to make transfers or 
withdrawals by negotiable or transferable instrument, payment order of 
withdrawal, telephone transfer, or other similar device for the purpose 
of making payments or transfers to third persons or others or from 
which the depositor may make third party payments at an automated 
teller machine (ATM) or a remote service unit, or other electronic 
device, including by debit card. Transaction account includes:
* * * * *
    (2) Deposits or accounts on which the depository institution has 
reserved the right to require at least seven days' written notice prior 
to withdrawal or transfer of any funds in the account and that are 
subject to check, draft, negotiable order of withdrawal, share draft, 
or other similar item, including accounts described in paragraph (d)(2) 
of this section (savings deposits) and including accounts authorized by 
12 U.S.C. 1832(a) (NOW accounts).
    (3) Deposits or accounts on which the depository institution has 
reserved the right to require at least seven days' written notice prior 
to withdrawal or transfer of any funds in the account and from which 
withdrawals may be made automatically through payment to the depository 
institution itself or through transfer or credit to a demand deposit or 
other account in order to cover checks or drafts drawn upon the 
institution or to maintain a specified balance in, or to make periodic 
transfers to such accounts, including accounts authorized by 12 U.S.C. 
371a (automatic transfer accounts or ATS accounts).
    (4) Deposits or accounts on which the depository institution has 
reserved the right to require at least seven days' written notice prior 
to withdrawal or transfer of any funds in the account and under the 
terms of which, or by practice of the depository institution, the 
depositor is permitted or authorized to make withdrawals for the 
purposes of transferring funds to another account of the depositor at 
the same institution (including transaction account) or for making 
payment to a third party, regardless of the number of such transfers 
and withdrawals and regardless of the manner in which such transfers 
and withdrawals are made.
* * * * *
    (6) All deposits other than time deposits, including those accounts 
that are time deposits in form but that the Board has determined, by 
rule or order, to be transaction accounts.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, April 23, 2020.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020-09044 Filed 4-24-20; 11:15 am]
 BILLING CODE 6210-01-P