Banking and Finance Law Daily Fed lifts Regulation D transfer limits in response to coronavirus crisis
Friday, April 24, 2020

Fed lifts Regulation D transfer limits in response to coronavirus crisis

By Charles A. Menke, J.D.

The Fed’s action permits depository institutions to immediately suspend enforcement of Reg. D’s six-transfer limit to allow customers to make an unlimited number of transfers and withdrawals from savings deposits in light of financial disruptions due to the coronavirus crisis.

The Federal Reserve Board has issued an interim final rule amending Regulation D (12 CFR Part 204) eliminating the numeric limits on certain kinds of transfers and withdrawals that may be made each month from accounts characterized as 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, the Fed said. The amendments take effect immediately upon publication in the Federal Register, and comments will be accepted for 60 days thereafter.

Elimination of reserve requirements. Regulation D distinguishes between reservable "transaction accounts" and non-reservable "savings deposits" based on the ease with which the depositor may make transfers or withdrawals from the account. Accordingly, Regulation D had limited customers to six transfers or withdrawals from a savings deposit account per month. However, as a result of the elimination of reserve requirements on all transaction accounts, the retention of a regulatory distinction between reservable "transaction accounts" and non-reservable "savings deposits" is no longer necessary, the Fed said. Therefore, and in light of financial disruptions caused by the coronavirus crisis, the Fed deleted the six-transfer limit from the "savings deposit" definition in Regulation D.

Permitted, not required. The Fed noted that the interim final rule permits, but does not require, depository institutions to suspend enforcement of the six-transfer limit. In addition, the interim final rule does not require any changes to the deposit reporting practices of depository institutions.

Information collections. The Fed also made revisions to the FR 2900 series, FR Y-9, and FR 2886b reports to reflect the Regulation D amendments, and will publish a separate notice in the Federal Register to invite comment on a proposal to extend these reports for three years. The revisions take effect immediately upon publication in the Federal Register. According to the Fed, the revisions must be implemented expeditiously and, therefore, "public participation in the approval process would defeat the purpose of the collections of information, as delaying the revisions would cause public harm by interfering with financial institutions’ ability to take advantage of the emergency relief provided by the interim final rule in response to significant financial industry disruptions from the containment measures adopted in response to the public health concerns."

FFIEC reports. The Fed noted that the interim final rule amending Regulation D also affects several Federal Financial Institutions Examination Council reports, which are shared by the Fed, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency. Any corresponding revisions that need to be made to these FFIEC reports will be addressed in a separate Federal Register notice, the Fed said.

MainStory: TopStory BankingFinance BankingOperations ChecksElectronicTransfers Covid19 FederalReserveSystem FedTracker FinancialStability PrudentialRegulation

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