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Reg
D Amendment Relaxes Transfer and Withdrawal Rule
The Federal
Reserve Board (FRB) has issued a final rule that includes an
amendment to the definition of “savings deposit.” This move
eliminates the “three” sublimit that applies to checks and
drafts and simply limits all “convenient” transfers to not
more than six per month. The requirement being eliminated has long
been difficult for consumers to understand and has made compliance
with Regulation D (Reserve
Requirements of Depository Institutions) more challenging.
Background
The FRB’s criteria for distinguishing
between “transaction accounts” and “savings depositions” in
Regulation D are 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. Generally, the more
convenient making withdrawals or transfers from an account is, the
more likely the account holder will use the account for making
payments or transfers to third parties rather than for holding
savings. Therefore, the
rule limits the number of certain convenient kinds of transfers or
withdrawals that an account holder may make in a single month from
an account if that account is to be classified as a “savings
deposit.” For this purpose, “convenient “transfers or
withdrawals 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 institution or instructing the
transfer to be made), and transfers by check, debit card, or similar
order payable to third parties
Of those six “convenient” transactions
allowed per month, only three can currently be made by check, debit
card, or similar order made by the depositor or payable to third
parties. There is no limit in Reg D for the less convenient
transfers and withdrawals from savings deposits. For example, an
account holder may make transfers or withdrawals by mail, messenger,
automated teller machines, or in person or made by telephone (via
check mailed to the depositor) from savings deposits without
numerical limit.
In response to the request for comments some
commenters suggested the six transaction limit be removed while some
suggested institutions be allowed to set their own limits. After
reviewing all the suggestions, the FRB decided it was appropriate to
continue to set the limits itself and to maintain those monthly
numeric limits on “convenient” transfers and withdrawals to six
per month. One influencing factor in the decision is that the FRB is
required to impose reserve requirements on transaction accounts and
not other types of accounts. Therefore the FRB must maintain the
capacity to distinguish between transaction accounts and savings
deposits.
Final Rule
The rule is effective July 2, 2009; however,
institutions may classify accounts subject to the “three”
sublimit as “savings deposits” as long as necessary. Therefore,
the FRB decided not to provide a longer lead time for
implementation. The rule is available at http://edocket.access.gpo.gov/2009/pdf/E9-12432.pdf.
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