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Rules and Regulations Federal Register Vol. 85, No. 82
Tuesday, April 28, 2020
This section of the FEDERAL REGISTER • Mail: Ann E. Misback, Secretary, aggregates.’’ 1 These provisions are contains regulatory documents having general Board of Governors of the Federal specifically implemented in the applicability and legal effect, most of which Reserve System, 20th Street and computation and maintenance are keyed to and codified in the Code of Constitution Avenue NW, Washington, provisions of Regulation D (12 CFR Federal Regulations, which is published under DC 20551. 204.4 and 204.5, respectively) and in the 50 titles pursuant to 44 U.S.C. 1510. All public comments are available Board’s ‘‘FR 2900’’ series of deposit The Code of Federal Regulations is sold by from the Board’s website at http:// reports (‘‘FR 2900 reports’’).2 the Superintendent of Documents. www.federalreserve.gov/generalinfo/ Regulation D distinguishes between foia/ProposedRegs.cfm as submitted, reservable ‘‘transaction accounts’’ and unless modified for technical reasons or non-reservable ‘‘savings deposits’’ based FEDERAL RESERVE SYSTEM to remove personally identifiable on the ease with which the depositor information at the commenter’s request. may make transfers (payments to third 12 CFR Part 204 Accordingly, comments will not be parties) or withdrawals (payments [Docket No. R–1715; RIN 7100–AF 89] edited to remove any identifying or directly to the depositor) from the contact information. Public comments account. Prior to this interim final rule, Regulation D: Reserve Requirements may also be viewed electronically or in Regulation D limited the number of of Depository Institutions paper in Room 146, 1709 New York certain convenient kinds of transfers or Avenue NW, Washington, DC 20006, AGENCY: Board of Governors of the withdrawals that an account holder may between 9:00 a.m. and 5:00 p.m. on Federal Reserve System. make from a ‘‘savings deposit’’ to not weekdays. more than six per month (six transfer ACTION: Interim final rule, request for limit).3 Similarly, prior to this interim public comment. FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special final rule, Regulation D also imposed SUMMARY: The Board of Governors of the Counsel (202–452–3565), Legal requirements on depository institutions Federal Reserve System (‘‘Board’’) is Division, or Matthew Malloy (202–452– for either preventing transfers in excess amending its Regulation D (Reserve 2416), or Heather Wiggins (202–452– of six transfer limit or for monitoring Requirements of Depository Institutions) 3674), Division of Monetary Affairs; for such accounts ex post for violations of to delete the numeric limits on certain users of Telecommunications Device for the limit.4 kinds of transfers and withdrawals that the Deaf (TDD) only, contact 202–263– may be made each month from ‘‘savings 4869; Board of Governors of the Federal 1 12 U.S.C. 248(a). deposits.’’ The amendments are Reserve System, 20th and C Streets NW, 2 ‘‘Report of Transaction Accounts, Other Deposits, and Vault Cash—FR 2900’’ (OMB Number intended to allow depository institution Washington, DC 20551. 7100–0087). See, e.g., FR 2900 (Commercial Banks) customers more convenient access to SUPPLEMENTARY INFORMATION: at https://www.federalreserve.gov/reportforms/ their funds and to simplify account forms/FR_2900cb20180630_f.pdf. administration for depository I. Statutory and Regulatory Background 3 ‘‘Convenient’’ transfers or withdrawals for this Section 19 of the Federal Reserve Act purpose include preauthorized or automatic institutions. There are no mandatory transfers (such as overdraft protection transfers or changes to deposit reporting associated (the ‘‘Act’’) authorizes the Board to arranging to have bill payments deducted directly with the amendments. impose reserve requirements on certain from the depositor’s savings account), telephonic DATES: Effective date: This rule is types of deposits and other liabilities of transfers (made by the depositor telephoning or depository institutions solely for the sending a fax or online instruction to the bank and effective on April 24, 2020. instructing the transfer to be made), and transfers Comment date: Comments must be purpose of implementing monetary by check, debit card, or similar order payable to received on or before June 29, 2020. policy. Specifically, section 19(b)(2) of third parties. 12 CFR 204.2(d)(2). Applicability date: The changes to the the Act (12 U.S.C. 461(b)(2)) requires 4 12 CFR 204.2(d)(2) note 4 explains that in order numeric limits on certain kinds of each depository institution to maintain to ensure that no more than the permitted number of withdrawals or transfers are made, for an account transfers and withdrawals that may be reserves against its transaction accounts, to come within the definition of ‘‘savings deposit,’’ made each month from accounts nonpersonal time deposits, and a depository institution must either, prevent characterized as ‘‘savings deposits’’ Eurocurrency liabilities, as prescribed withdrawals or transfers of funds from this account were applicable on April 23, 2020. by Board regulations. Reserve that are in excess of the limits established by § 204.2(d)(2), or to adopt procedures to monitor ADDRESSES: You may submit comments, requirement ratios for nonpersonal time those transfers on an ex post basis and contact identified by Docket Number R–1715; deposits and Eurocurrency liabilities customers who exceed the established limits on RIN 7100- AF 89, by any of the have been set at zero percent since 1990 more than occasional basis. For customers who following methods: and, as discussed below, were recently continue to violate those limits after they have been • contacted by the depository institution, the Agency Website: http:// set to zero percent for transaction depository institution must either close the account www.federalreserve.gov. Follow the accounts. and place the funds in another account that the instructions for submitting comments at Section 11(a)(2) of the Act authorizes depositor is eligible to maintain or take away the http://www.federalreserve.gov/ the Board to require any depository transfer and draft capacities of the account. An account that authorizes withdrawals or transfers in generalinfo/foia/ProposedRegs.cfm. institution ‘‘to make, at such intervals as excess of the permitted number is a transaction • Email: regs.comments@ the Board may prescribe, such reports of account regardless of whether the authorized federalreserve.gov. Include the docket its liabilities and assets as the Board number of transactions is actually made. For number and RIN in the subject line of may determine to be necessary or accounts described in § 204.2(d)(2) the institution at the message. desirable to enable the Board to its option may use, on a consistent basis, either the • date on the check, draft, or similar item, or the date Fax: (202) 452–3819 or (202) 452– discharge its responsibility to monitor the item is paid in applying the limits imposed by 3102. and control monetary and credit that section.
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II. Discussion C. Impact of the Interim Final Rule A.4. No. The interim final rule does not have any impact on § 204.2(d)(1) of A. Recent Developments The Board anticipates that the adoption of the interim final rule could Regulation D. The ‘‘reservation of right’’ In January 2019, the FOMC give rise to questions from depository continues to be a part of the definition announced its intention to implement institutions and their customers of ‘‘savings deposit’’ under the interim monetary policy in an ample reserves regarding the impact of the interim final final rule. regime. Reserve requirements do not rule on access to funds, account Q.5. If a depository institution suspends enforcement of the six transfer play a role in this operating framework. agreements, reporting practices, and limit on a ‘‘savings deposit,’’ is the In light of the shift to an ample reserves other related matters. Some anticipated depository institution required to regime, the Board announced that, questions are set forth below, together change the way that interest on the effective March 26, 2020, reserve with brief answers, in a ‘‘frequently requirement ratios were reduced to zero account is calculated or reported? asked questions’’ (FAQ) format. A.5. No. The interim final rule does percent. This action eliminated reserve Concurrently with the adoption of the requirements for thousands of not require a depository institution to interim final rule, the Board is setting change the way it calculates or reports depository institutions and helped to forth these FAQs on its existing support lending to households and interest on an account where the ‘‘Savings Deposit Frequently Asked depository institution has suspended businesses. Questions’’ web page 5 and will update As a result of the elimination of enforcement of the six transfer limit. that page with FAQ revisions and Q.6. Suppose a depository institution reserve requirements on all transaction additional FAQs as needed. has account agreements with its accounts, the retention of a regulatory Q.1. Does the interim final rule ‘‘savings deposit’’ customers that distinction in Regulation D between require depository institutions to require the depository institution to reservable ‘‘transaction accounts’’ and suspend enforcement of the six enforce the six transfer limit. Suppose non-reservable ‘‘savings deposits’’ is no convenient transfer limit on accounts further that the depository institution longer necessary. In addition, financial classified as ‘‘savings deposits’’? would like to amend those account disruptions arising in connection with A.1. No. The interim final rule agreements so that the depository the novel coronavirus situation have permits depository institutions to institution no longer has a contractual caused many depositors to have a more suspend enforcement of the six transfer obligation to enforce the six transfer urgent need for access to their funds by limit, but it does not require depository limit on its ‘‘savings deposit’’ accounts. remote means, particularly in light of institutions to do so. Does the interim final rule require the Q.2. May depository institutions the closure of many depository depository institution to amend those continue to report accounts as ‘‘savings institution branches and other in-person agreements in any particular way? facilities. deposits’’ on their FR 2900 deposit A.6. No. The interim final rule does reports even after they suspend B. Interim Final Rule not specify the manner in which enforcement of the six transfer limit on depository institutions that choose to Because of the elimination of reserve those accounts? amend their account agreements may do requirements and because of financial A.2. Yes. Depository institutions may so. disruptions related to the novel continue to report these accounts as Q.7. If a depository institution coronavirus, the Board is amending ‘‘savings deposits’’ on their FR 2900 chooses to suspend enforcement of the Regulation D, effective immediately, to reports after they suspend enforcement six transfer limit on a ‘‘savings deposit,’’ delete the six transfer limit from the of the six transfer limit on those must the depository institution change ‘‘savings deposit’’ definition. This accounts. the name of the account or product if interim final rule includes deletion of Q.3. If a depository institution the account or product name has the the provisions in the ‘‘savings deposit’’ suspends enforcement of the six transfer words ‘‘savings’’ or ‘‘savings deposit’’ in definition that require depository limit on a ‘‘savings deposit,’’ may the it? institutions either to prevent transfers depository institution report the account A.7. No. The interim final rule does and withdrawals in excess of the limit as a ‘‘transaction account’’ rather than as not require depository institutions to or to monitor savings deposits ex post a ‘‘savings deposit’’? change the name of any accounts or for violations of the limit. The interim A.3. Yes. If a depository institution products that have the words ‘‘savings’’ final rule also makes conforming suspends enforcement of the six transfer or ‘‘savings deposit’’ in the name of the changes to other definitions in limit on a ‘‘savings deposit,’’ the account or product. Regulation D that refer to ‘‘savings depository institution may report that Q.9. May depository institutions deposit’’ as necessary. account as a ‘‘transaction account’’ on suspend enforcement of the six transfer The interim final rule allows its FR 2900 reports. A depository limit on a temporary basis, such as for depository institutions immediately to institution may instead, if it chooses, six months? suspend enforcement of the six transfer continue to report the account as a A.9. Yes. limit and to allow their customers to ‘‘savings deposit.’’ Q.10. Suppose that a depository make an unlimited number of Q.4. Does the interim final rule have institution currently has policies or convenient transfers and withdrawals any impact on the ‘‘reservation of right’’ provisions in their savings deposit provisions set forth in § 204.2(d)(1) of account agreements pursuant to which from their savings deposits. The interim 6 final rule permits, but does not require, Regulation D? depository institutions to suspend which the depositor is not required by the deposit 5 https://www.federalreserve.gov/supervisionreg/ contract but may at any time be required by the enforcement of the six transfer limit. savings-deposits-frequently-asked-questions.htm. depository institution to give written notice of an The interim final rule also does not 6 The ‘‘reservation of right’’ refers to the intended withdrawal not less than seven days require any changes to the deposit provisions of § 204.2(d)(1) of Regulation D where a before withdrawal is made, and that is not payable reporting practices of depository depository institution is not required to impose on a specified date or at the expiration of a seven days’ advance notice of withdrawals from specified time after the date of deposit. The term institutions. Additional information on ‘‘savings deposits’’ but reserves the right at any time savings deposit includes a regular share account at the impact of the interim final rule is set to do so. Section 204.2(d)(1) provides that savings a credit union and a regular account at a savings forth in the next section. deposit means a deposit or account with respect to and loan association. 12 CFR 204.2(d)(1).
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the depository institution charges fees to rule to prepare and make available a Although there may be substantive savings deposit customers for transfers regulatory flexibility analysis that changes to the affected FFIEC reports and withdrawals that exceed the six describes the impact of the final rule on that result from the revised definition of transfer limit. May a depository small entities. 5 U.S.C. 603(a). The the ‘‘savings deposit’’ definition in institution that suspends enforcement of Regulatory Flexibility Act provides that Regulation D, the changes should be the six transfer limit continue to charge an agency is not required to prepare and minimal and result in a zero net change these fees when savings deposit publish a regulatory flexibility analysis in hourly burden. Submissions will, customers make seven or more if the agency certifies that the final rule however, be made by the agencies to convenient transfers and withdrawals in will not have a significant economic OMB. a month? impact on a substantial number of small The changes to the affected Board and A.10. Regulation D does not require or entities. 5 U.S.C. 605(b). FFIEC reports and their instructions will prohibit depository institutions from Pursuant to section 605(b), the Board be addressed in a separate Federal charging their customers fees for certifies that this interim final rule will Register notice. transfers and withdrawals in violation not have a significant economic impact of the six transfer limit. Accordingly, on a substantial number of small Plain Language the deletion of the six transfer limit does entities. The interim final rule Section 772 of the Gramm-Leach- not have a direct impact on the policies eliminates the numeric limits on certain Bliley Act requires the Board to use or account agreements of depository types of transfers that may be made each ‘‘plain language’’ in all proposed and institutions that charge such fees to month from a ‘‘savings deposit.’’ All final rules. In light of this requirement, their customers. depository institutions, including small the Board has sought to present the depository institutions, will benefit interim final rule in a simple and III. Request for Comment from the elimination of the transfer straightforward manner. The Board The Board seeks comment on all limits. There are no new reporting, invites comment on whether the Board aspects of this interim final rule. In recordkeeping, or other compliance could take additional steps to make the particular, the Board seeks comment on requirements associated with the rule easier to understand. the considerations that may lead interim final rule. depository institutions to choose, or to List of Subjects in 12 CFR Part 204 VI. Paperwork Reduction Act be required, to retain a numeric limit on Banks, Banking, Reporting and the number of convenient transfers that In accordance with the Paperwork recordkeeping requirements. may be made each month from a savings Reduction Act (44 U.S.C. 3506; 5 CFR deposit. 1320 Appendix A.1), the Board has Authority and Issuance reviewed the interim final rule under For the reasons set forth in the IV. Administrative Procedure Act authority delegated to the Board by the preamble, the Board is amending 12 In accordance with the Office of Management and Budget. CFR part 204 as follows: Administrative Procedure Act (‘‘APA’’) The interim final rule affects the section 553(b) (5 U.S.C. 553(b)), the following Board information collections: PART 204—RESERVE Board finds, for good cause, that The Reports of Deposits (FR 2900 series; REQUIREMENTS OF DEPOSITORY providing notice and an opportunity for OMB Control Number 7100–0087); the INSTITUTIONS (REGULATION D) public comment before the effective Financial Statements for Holding date of this rule would be contrary to Companies (FR Y–9 reports; OMB ■ 1. The authority citation for part 204 the public interest. In addition, Control Number 7100–0128); and the continues to read as follows: pursuant to APA section 553(d) (5 Consolidated Report of Condition and Authority: 12 U.S.C. 248(a), 248(c), 371a, U.S.C. 553(d)), the Board finds good Income for Edge and Agreement 461, 601, 611, and 3105. cause for making this amendment Corporations (FR 2886b; OMB Control ■ 2. In § 204.2: effective without 30 days advance Number 7100–0086). The Board has ■ a. Remove paragraph (c)(1)(ii); publication. The amendments relieve temporarily revised the instructions for ■ b. Redesignate paragraphs (c)(1)(iii) depository institutions of a regulatory the FR 2900 series, the FR Y–9 reports, and (iv) as paragraphs (c)(1)(ii) and (iii); burden and permit all customers, and the FR 2886b to reflect accurately and particularly those impacted by the aspects of the interim final rule. ■ c. Revise paragraphs (d)(2), (e) coronavirus situation, to have increased The interim final rule also affects the introductory text, and (e)(2) through (4) immediate access to their funds. following Federal Financial Institutions and (6). Implementation of the rule without 30 Examination Council (‘‘FFIEC’’) reports, The revisions read as follows: days advance publication will help both which are shared by the Board, the depository institutions and their Federal Deposit Insurance Corporation § 204.2 Definitions. customers to deal with the unique (‘‘FDIC’’), and the Office of the * * * * * pressures of the coronavirus situation Comptroller of the Currency (‘‘OCC’’) (d) * * * and to alleviate the adverse impacts it (together, the agencies): The (2) The term ‘‘savings deposit’’ also has caused. The Board believes that any Consolidated Reports of Condition and means: A deposit or account, such as an delay in implementing the rule would Income (‘‘Call Reports’’) (Board OMB account commonly known as a prove contrary to the public interest. Control Number: 7100–0036; FDIC OMB passbook savings account, a statement The Board is requesting comment on all Control Number 3064–0052; and OCC savings account, or as a money market aspects of the rule and will make any OMB Control Number 1557–0081) and deposit account (MMDA), that changes that it considers appropriate or the Report of Assets and Liabilities of otherwise meets the requirements in necessary after review of any comments U.S. Branches and Agencies of Foreign paragraph (d)(1) of this section and from received. Banks (FFIEC 002; OMB Control which, under the terms of the deposit Number: 7100–0032). The agencies have contract or by practice of the depository V. Regulatory Flexibility Act determined that there are revisions that institution, the depositor may be The Regulatory Flexibility Act should be made to the affected FFIEC permitted or authorized to make requires an agency that is issuing a final reports as a result of this rulemaking. transfers and withdrawals to another
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account (including a transaction regardless of the manner in which such I. Background account) of the depositor at the same transfers and withdrawals are made. Part II of the Federal Reserve Policy institution or to a third party, regardless * * * * * on Payment System Risk (PSR policy) of the number of such transfers and (6) All deposits other than time governs the provision of intraday credit withdrawals or the manner in which deposits, including those accounts that (also known as daylight overdrafts) to such transfers and withdrawals are are time deposits in form but that the depository institutions (institutions) made. Board has determined, by rule or order, with accounts at the Reserve Banks.1 * * * * * to be transaction accounts. The Board recognizes that the Federal (e) Transaction account means a * * * * * Reserve has an important role in providing intraday balances and credit deposit or account from which the By order of the Board of Governors of the depositor or account holder is permitted Federal Reserve System, April 23, 2020. to foster the smooth operation of the payment system. Under the PSR policy, to make transfers or withdrawals by Ann Misback, negotiable or transferable instrument, an institution that is ‘‘financially Secretary of the Board. payment order of withdrawal, telephone healthy’’ and has regular access to the transfer, or other similar device for the [FR Doc. 2020–09044 Filed 4–24–20; 11:15 am] discount window is eligible for intraday purpose of making payments or BILLING CODE 6210–01–P credit.2 The PSR policy establishes transfers to third persons or others or limits, or ‘‘net debit caps,’’ on the value of an institution’s uncollateralized from which the depositor may make FEDERAL RESERVE SYSTEM third party payments at an automated daylight overdrafts.3 The PSR policy also allows an institution with a self- teller machine (ATM) or a remote 12 CFR Chapter II service unit, or other electronic device, assessed net debit cap to request, at including by debit card. Transaction Reserve Bank discretion, collateralized [Docket No. OP–1716] account includes: capacity in addition to its uncollateralized net debit cap under the * * * * * Temporary Actions To Support the ‘‘maximum daylight overdraft capacity’’ Flow of Credit to Households and (2) Deposits or accounts on which the (max cap) program.4 depository institution has reserved the Businesses by Encouraging Use of The spread of COVID–19 has right to require at least seven days’ Intraday Credit disrupted economic activity in the written notice prior to withdrawal or AGENCY: Board of Governors of the United States and in many other transfer of any funds in the account and Federal Reserve System. countries. In addition, financial markets that are subject to check, draft, have experienced significant volatility. ACTION: Policy statement. negotiable order of withdrawal, share In light of these developments, draft, or other similar item, including SUMMARY: Due to the extraordinary institutions may face unanticipated accounts described in paragraph (d)(2) disruptions from the coronavirus intraday liquidity constraints and of this section (savings deposits) and disease 2019 (COVID–19), the Board of demands on collateral pledged to the including accounts authorized by 12 Governors of the Federal Reserve Reserve Banks. In response, the Board U.S.C. 1832(a) (NOW accounts). System (Board) is announcing has announced a series of actions to (3) Deposits or accounts on which the temporary actions aimed at encouraging support the flow of credit to households depository institution has reserved the healthy depository institutions to utilize and businesses to mitigate the right to require at least seven days’ intraday credit extended by Federal disruptions from COVID–19.5 As part of written notice prior to withdrawal or Reserve Banks (Reserve Banks). The this response, the Board has encouraged transfer of any funds in the account and Board recognizes that the Federal ‘‘institutions to utilize intraday credit from which withdrawals may be made Reserve has an important role in extended by Reserve Banks, on both a automatically through payment to the providing intraday balances and credit collateralized and uncollateralized depository institution itself or through to foster the smooth operation of the basis, to support the provision of transfer or credit to a demand deposit or payment system. These temporary liquidity to households and businesses other account in order to cover checks actions are intended to support the and the general smooth functioning of or drafts drawn upon the institution or provision of liquidity to households and payment systems.’’ 6 to maintain a specified balance in, or to businesses and the general smooth As described below, the Board is make periodic transfers to such functioning of payment systems. taking temporary actions that will accounts, including accounts authorized improve institutions’ access to Reserve DATES: by 12 U.S.C. 371a (automatic transfer These temporary actions are Bank intraday credit, provide accounts or ATS accounts). effective on April 24, 2020, and will institutions a ready and flexible source expire on September 30, 2020. (4) Deposits or accounts on which the of intraday funds to efficiently manage FOR FURTHER INFORMATION CONTACT: depository institution has reserved the their liquidity risk, and help institutions right to require at least seven days’ Jason Hinkle, Assistant Director (202– focus on other activities that support written notice prior to withdrawal or 912–7805), Brajan Kola, Senior lending to households and businesses. transfer of any funds in the account and Financial Institution Policy Analyst under the terms of which, or by practice (202–736–5683) Division of Reserve 1 See https://www.federalreserve.gov/ Bank Operations and Payment Systems paymentsystems/psr_about.htm. of the depository institution, the 2 See section II.D.1 of the PSR policy. depositor is permitted or authorized to or Evan Winerman, Senior Counsel (202–872–7578), Legal Division, Board 3 Id. make withdrawals for the purposes of 4 of Governors of the Federal Reserve See section II.E of the PSR policy. transferring funds to another account of 5 For a summary of actions, see https:// the depositor at the same institution System. For users of www.federalreserve.gov/covid-19.htm. (including transaction account) or for Telecommunications Device for the Deaf 6 See Federal Reserve Actions to Support the Flow making payment to a third party, (TDD) only, please contact 202–263– of Credit to Households and Businesses press 4869. release, March 15, 2020, available at https:// regardless of the number of such www.federalreserve.gov/newsevents/pressreleases/ transfers and withdrawals and SUPPLEMENTARY INFORMATION: monetary20200315b.htm.
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