Does anyone know if the Reg Q wipeout that takes effect this summer will also apply to escrow trust accounts?

The repeal of Regulation Q will allow banks to pay interest on any demand deposit account. There are no limitations on who can have a demand deposit account.

What does the repeal of Reg Q mean for premiums on deposits? Does this mean that there is no limit on the value of premiums and frequency? I understand that we still need to follow the IRS rules for premiums.

That is what it means.

It means that bankers will once again, after 78 years, be able to get into the madness of one-upmanship on rates and premiums in order to grab or retain market share on demand deposit accounts. They've been able to do that for other accounts since the 1980s. We can only hope that they don't get into crazy bidding wars for business.

Given the overdraft guidance, whatever the interchange rules end up being and who knows what from the CFPB, I'm wondering if there will be any incentive to offer significant rates on dda accounts other than those with major balances. Given the reserve difference between savings and transaction accounts, wouldn't the advantage still remain with savings? Just curious about your thoughts on this.

I do agree with you. I don't think that most banks will be pushing up rates on DDAs very fast, but do remember that this is a HUGE market -- business demand deposits. Some of the larger accounts might not want to get interest; they'll be more interested in the temporary (through 12/31/12) unlimited FDIC insurance. If all banks price DDA accounts sanely, there won't be a lot of competitive pressure to do something foolish. But bank management teams don't all look at the world in the same way, and the urge to grab deposit market share might just be too tempting for some to resist.

All very true, thanks for answering and for your insights.