[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
Federal Register
________________________________________________________________________
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
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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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