REG Q is being abolished. The NOW account rules have not been changed. We are planing on creating a new interest bearing transaction product for business accounts since we are not permitted to place them in our existing now account product. We are not sure what we will do about personal accounts; a new account product or just use NOW product. Other than the 7 day advance noticed not being required, they have little difference.

Does anyone know what the Call Report is gong to look like or how it will affect this?

The Terms & Agreement we use says "We may require not less than 7 days" notice in writing before each withdrawal from an interest-bearing account other than a time deposit, or from any other savings account as defined by Regulation D." Since this was written years ago without consideration of paying interest on a transaction account, does it apply to the new transaction accounts after July 21st or only to savings products?

Other than the 7 day advance noticed not being required, they have little difference.

And the loss of unlimited FDIC insurance.

You are going to have to rewrite your Terms and Agreement as that will no longer be the case if you choose to pay interest on DDA accounts.

The 7-day notice requirement applies to savings accounts, NOWs, MMDAs, but not to time deposits.

Call report change? Probably. I imagine the FFIEC will got something out to y'all by July (effective with the 9/30/11 Call).

I sent a message to our platform forms provider and they responded that no change was necessary for the terms and conditions. They also stated that the "7 days notice" language was hard coded and any change would result in customization of the form.

We are going to classify our current NOW balances as DDA balances effective 7/21/11. This will change the balances on two lines of the FR2900.

How are you going to do that without changing the terms of all your NOW accounts. You have reserved the 7 day notice - that makes them NOW accounts until a change of terms is given changing them to DDA accounts. I think a lot of banks are making a lot of assumptions and snap judgments without thinking this process through........

I agree with your general observation, but banks may or may not have included the limitation on withdrawals in their disclosures. Per Regulation DD's commentary, they are not required to:

iii. Limitations required by Regulation D on the number of withdrawals permitted from money market deposit accounts by check to third parties each month. Institutions need not disclose reservations of right to require notices for withdrawals from accounts required by federal or state law.

Even if they did disclose it, since its disclosure was not required, there is a legitimate argument that it would not be necessary to give notice of its deletion.

Ken, I guess I have to disagree. It's not a Reg. DD issue. It's a Reg. D issue.

204.2(b)(1) Demand deposit means a deposit that is payable on demand, or a deposit issued with an original maturity or required notice period of less than seven days, or a deposit representing funds for which the depository institution does not reserve the right to require at least seven days' written notice of an intended withdrawal.

If you don't reserve the right of withdrawal in the contract, it is a DDA account and not a NOW account. Regulation DD only indicates that this is not part of the Truth-in-Savings disclosure requirements, but does not mean it doesn't have to be included in the contract. How can a bank reserve this right and not have it in the contract?

Point taken; it's a contractual, not a disclosure issue. However, the observation that Regulation DD doesn't require that it be disclosed indicates that Regulation DD's notice requirements for deleting the language do not apply either.

The question remains whether is necessary to notify the customer that the language has been unilaterally deleted from the contract or whether the bank can simply mumble to itself that it will no longer enforce the language.

That language from Reg DD above is actually for MMDA/Savings withdrawal limitations, not the 7 day right ...isn't it? I know the 7 day requirement is in our Terms and Conditions as well as in the TIS disclosures, when applicable.

It is both:

(b)(5) Transaction limitations

1. General rule. Examples of limitations on the number or dollar amount of deposits or withdrawals that institutions must disclose are:

iii. Limitations required by Regulation D on the number of withdrawals permitted from money market deposit accounts by check to third parties each month. Institutions need not disclose reservations of right to require notices for withdrawals from accounts required by federal or state law.

You have to disclose the six preauthorized withdrawal limitation under Reg DD based on the first sentence in (iii), but not specifically the seven day notice in the second sentence.

We are considering creating a new product for Business Interest-Bearing Demand Deposits. I'm also presuming that if and when we do, it will have its own general ledger code so that they can be distinguished from other types of accounts on the trial balance.

Is anyone aware of any changes/announcements that have been issued with regards the FR2900 and/or Call Report, yet? I'm presuming the Call Report may wait until end of September; not sure of the FR2900.