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Depository Services CCE-DEP Comptroller of the Currency Administrator of National Banks Depository Services Comptroller’s Handbook August 2010 CCE Consumer Compliance Examination Depository Services Table of Contents Introduction ............................................................................................... 1 Reserve Requirements of Depository Institutions ........................................ 2 Background and Summary ................................................................ 2 Affected Institutions .......................................................................... 2 Computation of Reserves .................................................................. 3 Exemption From Reserve Requirements ............................................ 3 Regulation D Deposit Requirements ................................................. 5 Federal Reserve Board Staff Opinions and Rulings: Regulation D ...... 6 Savings Deposits .............................................................................. 9 Time Deposits ................................................................................ 24 Transaction Accounts ..................................................................... 29 References ..................................................................................... 40 Interest on Deposits ................................................................................. 42 Background and Summary .............................................................. 42 Federal Reserve Board Staff Opinions Interpreting Regulation Q ..... 43 Indirect Payment of Interest ............................................................ 43 Interest on Demand Deposits .......................................................... 45 References ..................................................................................... 48 Expedited Funds Availability ..................................................................... 49 Background and Summary .............................................................. 49 Availability of Funds and Disclosure of Funds Availability Policies .. 49 Permanent Funds Availability Schedules — Figure B ....................... 52 Exceptions 12 CFR 229.13 ......................................................... 53 Payment of Interest 12 CFR 229.14 ............................................ 56 General Disclosure Requirements 12 CFR 229.15 ...................... 56 Specific Availability Policy Disclosure 12 CFR 229.16 ................ 56 Initial Disclosures 12 CFR 229.17 .............................................. 57 Additional Disclosure Requirements 12 CFR 229.18 .................. 57 Miscellaneous 12 CFR 229.19 ................................................... 58 Relation to State Law 12 CFR 229.20 ......................................... 61 Civil Liability 12 CFR 229.21 ..................................................... 61 Subpart D — Substitute Checks...................................................... 62 General Provisions Governing Substitute Checks — 12 CFR 229.51 62 Substitute Check Warranties and Indemnity 12 CFR 229.52 and 229.53 ........................................................................................... 63 Expedited Recredit for Consumers 12 CFR 229.54 ...................... 63 Expedited Recredit for Banks 12 CFR 229.55 .............................. 67 Liability 12 CFR 229.56 ............................................................. 67 Comptroller’s Handbook i Depository Services Consumer Awareness 12 CFR 229.57 ......................................... 68 Mode of Delivery of Information 12 CFR 229.58 ........................ 69 References ..................................................................................... 70 Truth in Savings ........................................................................................ 71 Background and Summary .............................................................. 71 Coverage (12 CFR 230.1) ............................................................... 72 Definitions (12 CFR 230.2) ............................................................. 72 General Disclosure Requirements (12 CFR 230.3) ........................... 75 Account Disclosures (12 CFR 230.4) ............................................... 79 Subsequent Disclosures (12 CFR 230.5) .......................................... 84 Periodic Statement Disclosures (12 CFR 230.6) ............................... 87 Payment of Interest (Section 230.7) ................................................. 89 Advertising (12 CFR 230.8) ............................................................. 92 Record Retention (12 CFR 230.9) ................................................... 98 Section 230.10 — [Reserved] .......................................................... 99 Additonal Disclosure Requirements for Overdraft Services (12 CFR 230.11) .......................................................................................... 99 Effect on State Laws (Regulation DD — Appendix C) ..................... 106 Yield Calculations ........................................................................ 106 Subsequent Notice Requirements for Time Accounts .................... 108 Instructions for Access to APY Software (APYWIN 2.1) .................. 109 References ................................................................................... 110 Expanded Procedures Reserve Requirements of Depository Institutions ............................................................................................. 111 Expanded Procedures Interest on Deposits ........................ 112 Expanded Procedures Expedited Funds Availability Act ................... 113 Expedited Funds Availability Act Checklist .................................... 115 Expanded Procedures Truth in Savings ........................... 126 Truth in Savings Checklist ............................................................. 127 Conclusions ............................................................................................ 138 Depository Services ii Comptroller’s Handbook Introduction This booklet provides background information and optional expanded examination procedures for the following consumer protection regulations: • Reserve Requirements of Depository Institutions; • Electronic Fund Transfers; • Interest on Deposits; • Expedited Funds Availability; and • Truth in Savings. This booklet provides a synopsis of each regulation. Because the synopses are not comprehensive, users of this booklet should refer to each regulation for more detailed guidance and specific requirements. Examiners will select from the procedures those that are necessary, if any, after first completing a compliance core assessment. Comptroller’s Handbook 1 Depository Services Reserve Requirements of Depository Institutions Background and Summary Section 19 of the Federal Reserve Act gives the Federal Reserve Board authority to impose reserve requirements on deposits of member institutions for monetary policy purposes and to define terms such as deposit, savings deposit, time deposit, nonpersonal time deposit, and transaction account. The Monetary Control Act of 1980 (Title I of Pub. L. 96-221; 94 Stat. 132), which was enacted on March 31, 1980, imposes reserve requirements on depository institutions that maintain transaction accounts or nonpersonal time deposits. Effective November 13, 1980, the Board of Governors of the Federal Reserve System adopted a revised Regulation D to implement the provisions of that act. Affected Institutions Generally, depository institutions that maintain transaction accounts and nonpersonal time deposits are subject to Federal Reserve requirements. The term depository institutions encompasses: • Any federally insured commercial or savings bank, or any commercial or savings bank that is eligible to be insured by the Federal Deposit Insurance Corporation (FDIC); • Any mutual or stock savings bank; • Any savings and loan association that is a member of a Federal Home Loan Bank and that is insured by, or is eligible to apply for insurance with, the FDIC; • Any credit union that is insured by, or is eligible to apply for insurance with, the National Credit Union Administration Board; • United States branches and agencies of foreign banks whose total worldwide consolidated bank assets are greater than $1 billion or that are eligible to apply for FDIC insurance; and • Edge Act and agreement corporations (12 CFR 204.1(c)). Depository Services 2 Comptroller’s Handbook Computation of Reserves Section 204.3 of Regulation D sets out the rules for computing the amount of reserves that must be held and the methods for holding them. It also permits carryover of certain reserve excesses and deficiencies and specifies pass- through rules. The Reserve Maintenance Manual also sets out the fundamental rules of reserve calculation and account maintenance for institutions that file the Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900) either weekly or quarterly. This manual is available on the Federal Reserve’s financial services Web site (www.frbservices.org). Exemption From Reserve Requirements To provide relief from the reserve requirement to small depository institutions, the Garn-St Germain Depository Institutions Act of 1982 (Pub. L. 97-320; 96 Stat. 1520) exempted from reserve requirements the first $2 million of reservable liabilities of each depository institution. Classification of Accounts Regulation D defines deposit types under
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