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#144206 - 12/29/03 10:06 PM Money Market Sweeps
blvsinangels Offline
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Joined: Aug 2003
Posts: 372
I have a money market sweep question. I understand the transaction limitations on MMDA's however, is anyone using a fax service, or can you use a fax service, to authorize by 'messenger' transactions? Is there a way to avoid transaction limitations on the accounts, legally!!!, and use the MMDA as a holding account, but sweep to a transaction account to cover overdrafts? What are others doing about MMDA 'sweeps'??

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#144207 - 12/29/03 10:17 PM Re: Money Market Sweeps
Tisa Offline
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Tisa
Joined: Jun 2003
Posts: 938
Do you know the way to ...
Quote:

can you use a fax service, to authorize by 'messenger' transactions? Is there a way to avoid transaction limitations on the accounts, legally!!!




A fax machine doesn't count as a "messenger". It doesn't pass the "D" - as in "get off your Duff" - test. The customer or his representative (messenger) has to actually get up off the couch and go to the branch / ATM for it not to count as a charged transaction.

Or, to look at it another way, the fax is still using phone lines, just like Web banking, audio response systems, or your call center. It's still "non-personal".

I know, we're all looking for "ways around" the restrcitions - especially at the end of the month! We'd rather have them keep their funds in non-reservable accounts (non-transaction accounts), the customers would rather have their funds there so they can earn interest... but if they're being used for transactions, the funds need to be in the checking accounts.

Still the best way to "get around" the restriction is to set up a personal line of credit for the overdrafts. Transfers from savings for loan payments are unlimited...
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#144208 - 06/10/04 08:02 PM Re: Money Market Sweeps
Bank on it Offline
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Posts: 105
New York
I did a search to find an applicable thread which is why I am responding to such an old post. I still need some clarification on this issue:

Excessive sweeps out of an MMDA account to cover overdrafts in a checking account (with the same owner) is a Reg D violation, but excessive sweeps out of an MMDA to make payments to an overdraft line of credit is OK?

Please help - I just don't get it.

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#144209 - 06/10/04 08:04 PM Re: Money Market Sweeps
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
No. A debit from a Savings or MMDA to make a payment on a OD Line counts toward the 6 debit limitation.
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#144210 - 06/10/04 08:06 PM Re: Money Market Sweeps
Bank on it Offline
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Bank on it
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Posts: 105
New York



Still the best way to "get around" the restriction is to set up a personal line of credit for the overdrafts. Transfers from savings for loan payments are unlimited...





So this statement isn't true?

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#144211 - 06/10/04 08:10 PM Re: Money Market Sweeps
David Dickinson Offline
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David Dickinson
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Central City, NE
That statement is NOT true.
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#144212 - 06/10/04 08:20 PM Re: Money Market Sweeps
Bank on it Offline
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Bank on it
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Posts: 105
New York
Thank you for the clarification. I appreciate your quick responses.

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#144213 - 06/10/04 08:24 PM Re: Money Market Sweeps
Georgia Golfer Offline
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Joined: Jun 2003
Posts: 415
1st Tee
There is a bank around the corner that is "sweeping" for certain customers. Our FDIC examiner said in the exit interview that they were aware of changes coming with regards to sweep accounts & got the Pres all excited. Turns out they were talking about repurchase agreements and a non-deposit account. The Pres has statements showing the "sweeps" and doesn't believe me when I tell him that it's wrong. There has not been a change in D, right? I'm getting the impression from this thread that there has not been a change and the limitations still apply like they always have, correct?

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#144214 - 06/10/04 09:09 PM Re: Money Market Sweeps
David Dickinson Offline
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David Dickinson
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Central City, NE
There has been NO change. If/when there is one, you'll here it here at BOL first.
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#144215 - 06/11/04 05:08 PM Re: Money Market Sweeps
Deena Offline
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Deena
Joined: Nov 2000
Posts: 2,701
PA
Quote:

No. A debit from a Savings or MMDA to make a payment on a OD Line counts toward the 6 debit limitation.




David, why wouldn't this be a transfer "for the purpose of repaying loans and associated expenses at the same depository institution" and therefore not counted toward the six?
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#144216 - 06/11/04 07:04 PM Re: Money Market Sweeps
David Dickinson Offline
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David Dickinson
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Central City, NE
There is an exception to the loan payment exception. I'm quoting from a FRB memo that states Reg D does not count:
Transfers made for the purpose of repaying loans and associated expenses at the bank (as originator or servicer). This exemption does not apply to transfers to the bank that are made for the purpose of repaying loans that are made by the bank to the depositor’s demand account for the purpose of covering overdrafts.

If a sweep from the savings/MMDA to a checking account counts, what would be the difference of allowing the OD line to pay the checking account and then letting the savings/MMDA pay off the OD line? None. That is why this is not allowed as an exception to the debit limitation.
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#144217 - 06/14/04 01:29 PM Re: Money Market Sweeps
Deena Offline
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Posts: 2,701
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Thanks, David - I'm not sure whether I ever knew that or not, but if I did, I had forgotten. Can you tell me where I can find the FRB memo?
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