I had a really good question (at least I thought so) asked to me by one of our branch managers earlier and I'm just not sure how to respond. She was wondering if we were going to continue to penalize people that go over their Reg D transfer limits from their savings account now that many people are self quarantining and not able to get out of their homes. We just closed our lobbies this morning, however, our drive-thrus are open, but many people are not going out at all, especially older people and those with health issues. Should this be something the bank makes a decision on or should we wait and see if there is any kind of regulatory release addressing it? Is anyone else making exceptions for these transfers right now?

So far there have been no temporary amendments to the Reg, at least not that I'm aware. My advice would be to continue your normal business in this regard since it is driven by regulation. If an amendment is passed and provides a beginning date, you can always go back to that date refund any fees charged. Find other ways to assist your customers that doesn't break regulation, such as temporarily waiving maintenance fees.

The Fed has come out and removed reserve requirements. While this doesn't get rid of the Reg D withdrawal limits, it would allow you the option to convert savings accounts to transaction accounts with no need to reserve against them. It is unclear as of now whether or not this change is permanent or temporary.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315b.htm

Thank you both for your responses.

The Fed's rule says nothing about fees you charge your customers. It is only concerned with your ability to keep them from exceeding the 6/month transfer limitation. So you certainly can waive the fees without triggering any examiner critique.

I plan to waive the fee; however I am concerned about customers hitting the 3 months in a rolling 12 month period very quickly it this stretches out. Quite honestly the 1st and 2nd letters do not get their attention, it is the fee that gets their attention.

I am also concerned about customers hitting the 3 months in a rolling 12 month period very quickly. Our state is currently under a Safer at Home order and I anticipate more will be using electronic means to pay bills and transfer funds. I am feeling a little guilty sending out the letters reminding them to stay within the limits.

Personally, under the circumstances, I think this might be about number 152 on my list of a 100 things to worry about right this minute.

I am in Randy's camp on this question. With reserve requirements knocked to $0 it's not likely that strict adherence to the §204.2(d)(2) definition of "savings account" is going to be a top priority with regulators.

That said, you can't totally ignore the matter and give customers free rein on transfer limits.

Thanks again for all the responses on this post. I was out last week as our bank has went to alternating groups of employees working by week. We don't charge a fee when the customer goes over their limit, we actually shut down their transfer abilities when we send out the 2nd notification letter. I was also feeling kind of guilty doing this when we are being told by state and federal government to stay home. Looking at my report today after being out for a week, we have a lot of customers who went over their limits during the last week. I have emailed my supervisor to see if we could make a bank decision to not shut down transfer abilities during this time, at least until the lobbies open back up, and simply have our CSR's call customers and discuss options to keep them from consistently going over their limit. I would of course keep detailed notes as to why we did this, when we started and when we stopped.

Thanks again!

The FRB basically clarified that you still have to monitor for excessive withdrawls but should attempt to work with customers, by converting/reporting applicable accounts as transaction accounts. See the FAQ here, starting with question 7: https://www.frbservices.org/resources/central-bank/faq/reserve-account-admin-app.html#collapsea7

Today, Reg D was amended. Restriction on transfers has been removed.

Do you have a source for that?

Thank you!

I am confused. Is this effective today or out for comment?

The suspension of the limits is effective as of 4/23/2020. This is an interim final rule, so the effective date for the rule is date of publication in Federal Register, but also open for any comment from the public for period specified - 60 days after publication in FR.

Federal Reserve Board announces interim final rule to delete the six-per-month limit on convenient transfers from the "savings deposit" definition in Regulation D
For release at 10:00 a.m. EDT
The Federal Reserve Board on Friday announced an interim final rule to amend Regulation D (Reserve Requirements of Depository Institutions) to delete the six-per-month limit on convenient transfers from the "savings deposit" definition. The interim final rule allows depository institutions immediately to suspend enforcement of the six transfer limit and to allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits at a time when financial events associated with the coronavirus pandemic have made such access more urgent.
The regulatory limit in Regulation D was the basis for distinguishing between reservable "transaction accounts" and non-reservable "savings deposits." The Board's recent action reducing all reserve requirement ratios to zero has rendered this regulatory distinction unnecessary.
Concurrently, the Federal Reserve is making temporary revisions to the FR 2900 series, FR Y-9, and FR 2886b reports to reflect the amendments to Regulation D.

Will this change be permanent or will it be reinstated once the pandemic is over?

Thank you RVFlyboy!

I see, on Page 6, that the interim final rule includes the deletion of the provisions in the savings deposit definition that require the bank to monitor savings deposits ex post for violations of the limit. Am I misunderstanding that provision?

That was posted by Adam to this thread before the release today of the new rules.

Thank you! I stay in a state of confusion lately.

The Board finds good cause for making this amendment effective without 30 days advance publication. The amendments relieve depository institutions of a regulatory burden and permit all customers, particularly those impacted by the coronavirus situation, to have increased immediate access to their funds. Implementation of the rule without 30 days advance publication will help both depository institutions and their customers to deal with the unique pressures of the coronavirus situation and to alleviate the adverse impacts it has caused.

The Board believes that any delay in implementing the rule would prove contrary to the public interest. The Board is requesting comment on all aspects of the rule and will make any changes that it considers appropriate or necessary after review of any comments received.

The interim final rule permits, but does not require, depository institutions to suspend enforcement of the six transfer limit. It may also suspend enforcement of the six transfer limit on a temporary basis. The interim final rule also does not require any changes to the deposit reporting practices of depository institutions. Additional information on the impact of the interim final rule is also provided as well as some great FAQ's.

The interim final rule does not require a depository institution to change the way it calculates or reports interest on an account where the depository institution has suspended enforcement of the six transfer limit.

The interim final rule does not specify the manner in which depository institutions that choose to amend their account agreements may do so.

The interim final rule does not require depository institutions to change the name of any accounts or products that have the words “savings” or “savings deposit” in the name of the account or product.

Regulation D does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six transfer limit. Accordingly, the deletion of the six transfer limit does not have a direct impact on the policies or account agreements of depository institutions that charge such fees to their customers.

The interim final rule does not have any impact on section 204.2(d)(1) of Regulation D. The “reservation of right” continues to
be a part of the definition of “savings deposit” under the interim final rule.

Depository institutions may continue to report these accounts as “savings deposits” on their FR 2900 reports after they suspend enforcement of the six transfer limit on those accounts.

If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” the depository institution may report that account as a “transaction account” on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a “savings deposit.”

Decisions to be made.

Is this Reg. D change permanent? I keep seeing references to "suspend" but the wording makes it seem permanent.

I wonder why the FRB put something about six months in Q&A 10 of their FAQs? https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm

It is just giving you the option

I also have the question of "is this permanent or temporary?". My reading of it makes it seem that it is permanent as they don't say anywhere "temporarily" (that I saw anyway). Any thoughts?

In order to "reinsert" that language into Regulation D, the Fed would have to provide another proposal of rulemaking, comment period, etc. This appears to be a shift in monetary policy.

If I understood what "ample reserves regime" meant I think it would go a long way to understanding why the Fed took this action. Can anyone explain that?

Is my assumption accurate that we do not need to provide an advance notice of amendments to our account agreements? We can choose not to enforce the restrictions effective immediately, and notify the customer in the next 30 days?

This change is to the customers' benefit so there is no advance notice needed. Whether/how you notify customers or not is a business decision.

Can we stop monitoring, no changes to notices or anything, but basically stop reviewing and sending letters? Decide a more temperament t solution after the comment period? That just seems to simple.

Totally a business decision. The six transfers limitation no longer exists.

I'll be presenting a special ONE-HOUR webinar, "Limits on Savings Accounts -- An Update," to explain the ins and outs of the Fed's action on Monday, May 18.

Why should the kids have all the "remote learning" fun?

If the change is permanent and effectively immediately, what would be a business reason to continue with your current process? The rule states the bank has the option to continue. Why would anyone want to keep doing the work? I want to make sure I'm not missing something that seems so straight forward - stop monitoring and sending notices to anyone exceeding the six withdrawal limit. Send a notice if you so choose notifying customers, make updates to your disclosures, website, etc. where there is mention of the limitations.

Why would anyone keep doing the work? To maintain the infrastructure of a process than could again become a requirement. As Brian mentioned earlier in this thread, the reserve requirements (and the transaction monitoring) is part of the Fed's monetary policy. With the current state of affairs, this action is understandable. However, as the economy recovers, the Fed may decide to make adjustments to their monetary policy, which could be similar to what they have done before. Some may choose to keep the infrastructure of their program in place for a while in hopes of getting a feel for what the Fed may do when the economy recovers.

There is some notion within our institution that this is a temporary change to Reg D. Does anyone know of a citation for that? From what I can tell this is a permanent change. Obviously with big implications. Is there a reason to think it is not permanent?

I answered the comment on "permanent vs. temporary" in post #2235656 on a previous page of this discussion.

Thanks Brian, I appreciate that.

What's to stop the fed from just dropping this on us again with an interim rule like they've done here? It just seems very difficult for us to advise our customers with any authority. This feels like a sea change that has come from, almost, nowhere.

I am not sure why anyone would go out of their way to advise customers of the change - just quit monitoring.

Thanks, Randy. I suppose I meant more our business partners within the organization.

And remove any mention of the limitations in account opening disclosures and marketing materials.

I agree Randy, notification to the customer is not needed, although I think some of our customers would be glad to know this limitation no longer exists. Simple statement message on a future quarter-end statement cycle is easy enough.

I'll be presenting a special ONE-HOUR webinar, "Limits on Savings Accounts -- An Update," to explain the ins and outs of the Fed's action on Monday, May 18.

Why should the kids have all the "remote learning" fun?

Take note, though, that there is a fair amount of online press on this amendment already, and it's not always thorough. So it's possible your customers could assume there are no longer any restrictions on their savings transfers, even if your bank hasn't eliminated them yet. You'll want to determine how to address matters if a customer doesn't understand that the bank had the option to drop the restrictions but didn't or that the bank will continue charging $25 for each withdrawal or transfer after 6 in a month (or whatever your fee structure is).

You could suspend what you're doing, including the imposition of fees, perhaps, until the economy comes back to life and people return to work, and then figure out what you're going to do going forward. Whatever it is that you decide, it will be simpler to understand, explain and control than the rule as it was last month.

What is the impact to Reg CC and placing holds? Would savings accounts, now "transaction accounts," be in play to permissibly place a hold?

Reg CC continues to apply to only transaction accounts (unless your state law extends coverage to savings accounts.) There is no requirement to reclassify your savings accounts as transaction accounts. You just don't have to monitor for excessive transactions.

So, on the Call Report, schedule RC-E...report the savings accounts as transaction accounts if we opt to eliminate the limits?

You have the option, but if you do, they become subject to Regulation CC. Not a bridge I would want to cross.

Your choice. Check out the FAQs

https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm

5. If a depository institution suspends enforcement of the six-transfer limit on a "savings deposit," may the depository institution report the account as a "transaction account" rather than as a "savings deposit"?

Yes. If a depository institution suspends enforcement of the six-transfer limit on a "savings deposit," the depository institution may report that account as a "transaction account" on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a "savings deposit."

I think the key phrases in the Reg CC definition of account include the fact that it includes "transaction accounts as described in 12 CFR 204.2(e)" and that it "does not include savings deposits or accounts described in 12 CFR 204.2(d)(2), [b]even though such accounts permit third party transfers."

So, if you do change your savings deposits to make them transaction accounts, they will be subject to Reg CC.

Although I don't necessarily consider FRB Services as an arbiter of the fine distinctions between transaction accounts and savings deposits it has included this answer in an FAQ on the elimination of the savings transfer limits. So I can't recommend reporting your savings deposits as transaction accounts unless you want them subject to Reg CC (other than non-NOW-eligible accounts retaining the "reservation of right" provision).



It's FAQ #6, found HERE.

Thank you for the info!

So, just to get this straight, do we change our account opening disclosures eliminating the six transfer limitation or do we leave it and just not monitor - that would be saying one thing and doing another

Depends on if you are eliminating the restriction. Business decision.

If you are going to eliminate the limitation, you can update your account disclosures for accounts opened going forward. You do not have to notify existing customers via a change in terms, but may elect to.

As noted in the FAQthere is no mandated notification method.

Suppose a depository institution has account agreements with its "savings deposit" customers that require the depository institution to enforce the six-transfer limit. Suppose further that the depository institution would like to amend those account agreements so that the depository institution no longer has a contractual obligation to enforce the six-transfer limit on its "savings deposit" accounts. Does the interim final rule require the depository institution to amend those agreements in any particular way?

No. The interim final rule does not specify the manner in which depository institutions that choose to amend their account agreements may do so.

If we completely eliminate the six transfer restriction, and change our disclosure for account opening going forward, and then the 6 transfer restriction is made a requirement again, we would have to redisclose to all savings customers

I would just leave everything alone and just quit monitoring and come back and visit this in a year and figure out what you want to do, if anything.

OK, sounds good - thank you

Will this be a UDAAP issue if our disclosures say we limit them to 6, but then do not monitor and let them do as many as they want? Just wondering if we need to let customers know if we are 'temporarily suspending' the six per month limit, so our disclosures are not deceptive. That would also give us time for the Fed to put out a final rule as well as decide what we might want to do on a permanent basis.

Just use your common sense here. Giving customers more access to their funds isn't a UDAAP issue. Where is the consumer harm in that?

I do recommend informing your customers concerning a decision to temporarily suspend. It could be a reassuring piece of news for them. But if your plan is to bring the limits back once the economy crawls back, don't include a date in that notice for reactivation of the limits. Just say that you'll give them advance notice concerning reactivation.

Then, while you've got the limitations suspended, review them to decide what your want the limits (if any) to look like when they are reactivated, then start working on how and when to implement those changes. Once it's tested out, give customers plenty of advance notice (at least a month, preferably more) of what will happen and when.

That train of thought sort of ran over me, John: banks could make the business decision to enforce their own transaction limitations on accounts in the future (like the past Reg. D rules), it just wouldn't be according to Reg. D. Or am I misinterpreting your meaning.

That would be common sense to me, but our auditors (some of which are ex-examiners) would say it is deceptive because we are lying to our customers. We are telling them a six/month limit, so they think they are limited when actually they are not. Huge issue? Probably not.

We would say temporarily suspended until we decide what to do going forward.

Thanks!

What about customers who had their savings accounts closed in recent months for exceeding the limit three times? I'm thinking the whole 12-month rolling calendar is also a non-issue now. Seems and obvious yes as I type this but my brain is on overload these days. I'm guessing we are able to open a saving account again now even if they are still within the 12 month window?

I don't see any reason to say no to a customer who inquires about a new savings/money market account.

I might as well apply for citizenship in the state of confusion!

Send me an application also!!!

We are preparing to revise our disclosures for the July 1 Reg CC changes. If we have made the business decision to stop monitoring, it seems reasonable that we also remove from our TIS brochures at the same time as the Reg CC changes. Is anyone else thinking along these lines?

Fiserv has already sent an announcement about spec changes. The REG D MAXIMUM COUNT can be adjusted to eliminate suspect transactions for tracking. To adjust or suspend fees a different area of the specs is accessed.

I'm a little concerned that by removing the maximum count that fees will not be assessed. Can someone that is more familiar with the specs advise? Are these connected?

If we have decided to keep the transaction limitations in our brochures/disclosures, but suspend monitoring, are we required to provide notice to our customers?

What would you disclose? That you are no longer following your processes?

From an Audi prospective if you are no longer monitoring, ensure that Policy and Procedure is updated to reflect what you are going to do.

There are no notification requirements in Reg. D concerning changes to Reg. D. If you have disclosed these limitations in your TISA disclosure, your Reg. E disclosure, etc. then you need to follow the change notice rules for those regulations.

1. TISA: (a) Change in terms. (1) Advance notice required. A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under Sec. 1030.4(b) of this part if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.

2. Reg E: (a) Change in terms notice. (1) Prior notice required. A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under § 1005.7(b) of this part if the change would result in:

(i) Increased fees for the consumer;

(ii) Increased liability for the consumer;

(iii) Fewer types of available electronic fund transfers; or

(iv) Stricter limitations on the frequency or dollar amount of transfers.

This is an "open-ended" piece of legislation where they have left it up to you. It is no longer required to monitor for these transactions. This has been removed from the Reg. You have no requirement under Reg. D to notify the customer of this.

Since neither TISA or Reg E are triggered with this change, I am missing your point as far as change of terms disclosure requirements.

I agree with Randy that neither the change in terms rules (1005.8) of Reg E nor the subsequent disclosure requirements (1030.8) of Regulation DD are triggered by this change as the customers don't adversely affect the customer (nor do they change the APY). In other words, you don't need to contact existing customers under Reg DD or Reg E. That said, if you are permanently moving away from these requirements, you will want to update your disclosures for new customers to accurately reflect your new practices.

That was the point, Randy. REMOVING this requirement would not trigger disclosure change notices as it is not changing the APY nor is it adversely affecting the consumer nor it is restricting activity on transfers. But these are the only POSSIBLE notice requirements that would exist if they have included these in their disclosures. They may also wish to remove these restrictions from their disclosures if they are included and are no longer going to be effective.

There are other things to think about as they are making the decision concerning whether or not they will monitor or alter these requirements in their respective financial institutions. They also need to remember other disclosures that may contain this information and notify according to the requirements of those regulations based on the their decisions. If they continue to monitor - no change, if they remove the requirement or alter the requirement - they must change these disclosures and possibly notify under these regs. if they are altering.

waldensouth - I misunderstand your statement then:

If you have disclosed these limitations in your TISA disclosure, your Reg. E disclosure, etc. then you need to follow the change notice rules for those regulations.

Since the change is to the customer's benefit (more frequent withdrawals permitted), Reg DD and Reg E subsequent disclosure requirements are not triggered. Any change notice would be a customer service decision.

If we change our Reg CC disclosure to include savings accounts, this would trigger a subsequent disclosure since Reg CC requires a notice of change in funds availability 30 days after the change if it is to the customer's benefit.

We are not changing our disclosures right now. We are not charging an excessive transaction fee for the time being and will revisit in a few months. We have no intention of offering a FREE savings or MMDA, so I'm sure it will be an interesting discussion when we meet to discuss how to price these products.

As noted in the Fed's Federal Register document that accompanied the April 24 publication of the interim final rule, the change in definitions affects Call Reports. It may be just the instructions that will have to be changed, or there may be something more. The Fed said that the FFIEC agencies will announce any changes in a separate FR publication. I would not do any messing around with how you code these accounts until you see what the Q2 Call Report instructions require.

As to the discussion earlier about any impact on the definition of "account" in Reg CC, remember that the April 24 Reg D amendments changed the definition of "transaction account," too. I think for now you can rely on the wording of the Reg CC "account" definition in 12 CFR 229.2(a), but my guess is that may become a concern somewhere down the road if your savings accounts don't by then have some form of transfer/withdrawal limits.

John...after reading BOTH new definitions in Reg D for Savings deposit and Transaction account....204(d)(1) and (d)(2)...alongside 204(e)....it is not clear to me what actually is the distinguishing feature between the two types of accounts now...
with the rewording of 204(e)(4) aren't savings accounts transaction accounts by definition now?

I'm asking for purposes of Reg CC....whether we decide to continue limiting withdrawals or not....wouldn't savings accounts now be subject to Reg CC based on 204(e)(4)? I'm so confused....

Read the new definition of "transaction account" in Reg D 204.2(e)(4). If you limit savings transfer/withdrawals, they aren't transaction accounts, and Reg CC's "account" definition won't fit.

So I just want to clarify that I am understanding all of this correctly. If we decide to permanently remove the transfer/withdrawal limitations, then our savings accounts would be considered "transaction accounts" whether we list them on the call report as transaction accounts or not? I'm trying to understand how Reg CC will come into play. I just read an article on the Reg D rule and this is what is said:

"The six-transfer limit has been one of two distinguishing features between a transaction account (typically, a checking account) and a savings deposit (a savings account). The other feature that has traditionally distinguished savings accounts from checking accounts is the requirement that financial institutions reserve the right to require seven days’ notice prior to withdrawal from a savings account. The seven-day notice requirement is not being eliminated as a result of this rulemaking. However, the definition of “transaction account” is being expanded to include accounts with the seven-day notice limitation. To put it simply, instead of three unique types of accounts (transaction, savings, and time accounts) there are now only two unique types of accounts (transaction and time accounts) as savings deposits are now a subset of transaction accounts. The interim final rule does not include a sunset date – a date where the old definitions return. As a result, these definitional changes are permanent and can only be changed by subsequent rulemaking."

"Many financial institutions already apply their funds availability policy to their savings accounts so there is not an action item here for those financial institutions. However, for financial institutions that have not previously extended their funds availability policy to savings accounts, it appears that the policy now applies by action of law. These institutions should review their account opening processes to determine whether savings account customers/members were given the financial institution’s funds availability policy at account opening and, if none was provided, deliver one to those customers/members. Also, given the July 1, 2020 Regulation CC amendments, financial institutions may want to review, and expand as needed, the list of who gets sent the Regulation CC change notices. Financial institutions should look for the FRB to provide additional guidance on this potentially complex issue."[i][/i]

I was first under the impression that Reg CC would not apply unless we made the decision to list these accounts as "transaction accounts" on our call report. But now reading the above, it seems to say that because of the changes made, Reg CC now applies by "action of law". Am I reading this correctly? We plan to meet on this new rule in the next few days and I just want to make sure I am understanding everything correctly so I don't pass on any wrong information.

Thanks!

Well, the Federal Reserve has said that you are permitted to continue to report your savings accounts as "savings deposits" even if you suspend enforcing the 6 transaction limits If you do continue to report such accounts as savings accounts, I don't believe that Reg CC is going to apply. However, if you choose to report your savings accounts as "transaction accounts" going forward, Reg CC would absolutely apply.

That's exactly how I understood it from the beginning, Adam. Until I read this article today - then I was confused all over again. I'm going to stick with what the FRB has stated in their FAQ's for now and go from there.

204 (d)(4) Deposits or accounts on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and under the terms of which, or by practice of the depository institution, the depositor is permitted or authorized to make withdrawals for the purposes of transferring funds to another account of the depositor at the same institution (including transaction account) or for making payment to a third party, regardless of the number of such transfers and withdrawals and regardless of the manner in which such transfers and withdrawals are made.

John....to me this means it doesn't matter whether you put limitations on the withdrawals or not.....I'm not seeing that if we put limits on withdrawals it is NOT a transaction account....to me this says regardless of limitations it IS a transaction account....

So I'm still not seeing what the difference between a savings and a deposit account is now....

Please help me see what I am not understanding....

It won't let me edit...that was supposed to be 204.2(e)(4)

Bankwoman1 - Where is that article from?

The thing I am looking at is that Reg CC hasn't been changed (at least not yet). 229.2(a)(1) (the definition of an account) still includes this: "but the term does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers."

204.2(d)(2) still references "savings deposits." While there isn't as much a difference between a "savings deposit" and a "transaction account," Reg D still contains separate definitions and Reg CC still excludes "savings deposits" as described in 204.2(d)(2).

I think this topic would make a great point to include in a comment letter looking for clarification.

Adam - it was an article that was sent to me from our forms vendor and was written by their principal attorney. Below is the link - I hope it is ok to include it here.

http://www.wolterskluwerfs.com/arti...15104&elqat=1&elqCampaignId=7857

I have to disagree with the article because of this statement in the definition of account in Reg CC: "but the term does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers"

Yes - but the article is saying that "transaction accounts" are being expanded to include accounts with the 7 day notice limitation. So, with the withdrawal/transfer limitations being removed and 7 day notice limitation pertaining to "transaction accounts" now also (according to this article), is there really a savings deposit account? I mean you can call it a savings deposit account if you want - but I take this article as saying it is still considered a transaction account.

It's all very confusing......

New Reg D: every account is a transaction account except a time deposit. However, savings deposits can be both savings deposits and transaction accounts, and the institution can choose to report them either way. What qualifies an account as a savings deposit? The only distinction left is the 7 day notice limitation. If the account doesn't have that (and is not a time deposit), then it's a transaction account only. If the account does have that, classify it either way.

Reg. CC: Account includes transaction accounts as described in 204.2(e), but does not include savings deposits described in 204.2(d)(2). So a savings deposit (an account that has the 7 day notice limitation) is not subject to Reg. CC funds availability irrespective of transfer limitations (or lack thereof).

Yes Rainman but the 7 day notice limitation IS in the transaction account definition too...

204.2(e)(2) Deposits or accounts on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and that are subject to check, draft, negotiable order of withdrawal, share draft, or other similar item, including accounts described in paragraph (d)(2) of this section (savings deposits) and including accounts authorized by 12 U.S.C. 1832(a) (NOW accounts).

So I'm confused....

I don't understand your point - all accounts are transaction accounts except time deposits - see 204.2(e)(6). All savings deposits are also transaction accounts - they fall under both definitions. That's why the FRB says that the FI can choose how to report savings deposits - either as savings deposits or as transaction accounts. But not all transaction accounts are savings deposits. The only thing (now) that makes an account a savings deposit is the 7 day limitation - 204.2(d)(1). So a checking account that does not contain the 7 day notice limitation can only be classified as a transaction account; it can't be classified as a savings deposit.

Or to put it another way, 204.2(e)(2) isn't saying that all accounts with a 7 day notice are transaction accounts; it's saying that all accounts that are accessible by check/draft etc. AND have a 7 day notice are transaction accounts.

ahou and rainman, that is exactly my thinking. Since 229.2(a)(1) of Reg CC still specifically exempts "savings deposits" as defined in 204.2(d)(2) of Regulation D, and Regulation D 204.2(d)(2) still exists (and still separately defines a "savings deposit"), it appears to me that if 1) the product complies with the requirements in 204.2(d)(2) to be a savings deposit and 2) an institution continues to report them as a savings deposit, then these products won't apply to Reg CC at this time.

In other words, as long as you don't change your product terms and don't reclassify your savings accounts as "transaction accounts" on applicable reports (i.e. Call report, FR 2900 series, FR Y-9, ect), then I don't believe Subpart B of Reg CC (which covers holds) is going to apply.

Rainman...I laughed when I read your comment...I'm not surprised you don't understand my point...I really am confused by this...it is going in too many circles for me to follow....I'm getting lost in all the loops to the different definitions...

Thank you to you and Adam...I'm trying to follow those trains of thoughts....but will admit the light still hasn't come on for me...

I completely understand, Compliance504. I like to see things multiple ways, so let me try saying this a bit differently...

To start, the question here is whether Regulation CC is now going to apply to savings accounts.

To answer this, we must look at what Regulation CC applies to. The answer to this comes inside the definition of an "account", as found in the definitions section of Reg CC (229.2) because all of the hold rules specifically apply to "an account". An account is defined in Reg CC as "a deposit...that is a transaction account as described in 204.2(e)", (which of course is a reference to the definitions section of Regulation D). But we can't stop here, because the definition of an account in Reg CC also SPECIFICALLY says that an "account" "does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers."

So, when we go to the revised Reg D that describes a "savings deposit" (which is 204.2(d)(2) as referenced above), we see that the term "savings deposit" still includes "a deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements in paragraph (d)(1) of this section and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor may be permitted or authorized to make transfers and withdrawals to another account (including a transaction account) of the depositor at the same institution or to a third party, regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made."

While a "savings deposit" is now considered a type of transaction account under Reg D, Reg CC still specifically excludes savings deposits from the definition of an account, which therefore still excludes these accounts from Reg CC hold requirements.

To recap, Regulation CC still does not apply to a "savings deposit" even though a "savings deposit" is also now considered a transaction account. To me, it is sort of like saying that Reg CC applies to all types of fruit, except it doesn't apply to apples because even though apples are a type of fruit, they are also specifically excluded. (And yes, this isn't really an apples to apples comparison. )

Well put.

Adam....thank you so much for this explanation!!!

The light is on a dimmer switch and slowing coming on.....

You will be getting some Call Report revisions that will have to be made due to the Fed's definition changes for savings deposits and transaction accounts. They should be coming out by June. The most likely changes will be in the instructions, rather than the Call Report itself. Whether you will have the flexibility to report savings deposits as transaction accounts or not will depend on what the FFIEC says, not the Fed's loose instructions for the FR 2900.

I'll be presenting a special ONE-HOUR webinar on the Fed's elimination of savings deposit transfer and withdrawal limitations at 2:30 ET on Monday, May 18. Register now for Limits on Savings Account Transfers -- An Update.

Any problem with keeping the savings and MMKT Account "as is" but just stop sending letters and closing accounts if the disclosed withdrawal limits are exceeded?

No.

I agree with Randy and to me, it seems like that really was the point of the rule - to allow you to just stop monitoring and enforcing withdrawal limits without changing anything else.

FYI - The Federal Reserve updated their FAQs yesterday to clarify what I explained previously: that savings deposits are still not subject to Reg CC holds.

https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm
13. How did the recent amendments to Reg D impact Reg CC?
On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six per month limit on convenient transfers from “savings deposits.” Among other things, the interim final rule amended the definition of “transaction account” in 12 CFR 204.2(e) such that the definition now includes accounts described in 204.2(d)(2) (savings deposits).

Regulation CC provides that an “account” subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC “account” definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC.

They've also updated the FAQ to make it clear that they don't intend to return to reserve requirements or to add back regulatory limits on savings deposit transfers/withdrawals.

The Fed could have made matters a lot clearer from the outset if it had made those statements and the statement about Reg CC on April 24, and added "eliminate" or "stop" to their use of "suspend."

The Fed rule writers seem to have forgotten where they left their "banker hats." They used to be better at anticipating some of the questions bankers might have about their rules.

John-

After attending your webinar yesterday, I noticed in the handout you included a statement that "subaccounts" are now gone. Does this mean we no longer need to provide the subaccount disclosure? Can you elaborate more?

As we discussed "off-line," sub-accounts aren't really as relevant to the changed definition of savings deposits as they are to the other big Reg D development -- the end of reserve requirements. Subaccounts have been used by many banks to categorize balances as savings deposits (no reserves) when the customer-facing side of the account behaves like a transaction account.

But because there is no longer a reserve requirement, there is no longer a need for subaccounts and if you don't keep them, you don't need the disclosures that go with them.

Can a Bank choose which types of Savings Deposit accounts they want to remove the six withdrawal limits on? For example, can we removed the limit on the standard savings deposit account, but not remove it on the Money Market Accounts?

Of course you can.

We stopped the monitoring of excessive transactions and charging an excessive transaction fee to our customers but we have not updated our new account disclosures. We were waiting until the end of the comment period in case they added it back (to avoid doing a change notice). So now that it's clear that the FED has no plans to add back the transfer limitations, we can update the account disclosures. Just want to confirm that it's not coming back

Thanks,

Under current circumstances - no. But like everything else, nothing is permanent.

Randy, I'm circling back to this. I'm wondering if most who have eliminated the transaction limit have changed their new account disclosures? We took the "sit on the fence" stance, but think we should change our disclosures now for new accounts to eliminate reference to the 6 transaction limit?

Not yet. Still waiving fees. We will be looking at this again in October.

Like CRL we too took the "sit on the fence" stance, we changed nothing and just stopped the back office operation of monitoring for excessive withdrawals....internally we documented that we would do nothing permanent until the final rule came out...

I'm wondering if we should do something permanent....should we change our disclosures to eliminate the reference to the 6 transaction limit....or should we continue to "temporarily suspend"

We also have a Reserve Requirement policy....since there are no longer reserve requirements, should we just delete this policy?

What have others been doing?

I should specify we have a Reg D-Reserve Requirement policy......is a Reg D policy still a necessity?

Since the Federal Reserve could change the reserve requirements at its discretion, unless Reg D is repealed, it's probably a good idea to keep that policy.

The Fed made a change to the definitions of Reg D. To reinstitute transaction limitations, the Fed would have to publish a notice in the federal register, have a comment period and set a future compliance date. The Fed addressed the verbiage of "suspend" when it updated the FAQs in May 2020.

https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm

Are the recent amendments to Regulation D temporary or permanent?
On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six-per-month limit on convenient transfers from "savings deposits." The underlying reason enabling the changes in Regulation D is the FOMC’s choice of monetary policy framework of an ample reserve regime. In such a regime, reserve requirements are not needed. As a result, the distinction made by the transfer limit between reservable and non-reservable accounts is also not necessary. The Committee’s choice of a monetary policy framework is not a short-term choice. The Board does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant.

Thank you Brian....I was aware of the FAQ update....but since it states that they may make adjustments to the definition of savings accounts in response to comments....I'm really hesitant to make any kind of changes until the final rule comes out.....

I am wondering what others have done....if any of you care to share.....

We too suspended the fees and discontinued monitoring for excessive transactions. We intend to keep the accounts priced as they are with an excessive transaction fee. Similar to any other account with excessive transactions. We will just charge the fee, but we will no longer be sending warning letters.

Will be sending all MMDA/SAV customers a statement message to announce that we have been waiving the fee due to the pandemic, but intend to start assessing again beginning XX/XX/XXX.

Will be revising TISA disclosures to revise the language about converting to another account type.

I've checked other banks websites in our area and so far I have not found any that have changed their pricing.

We never charged any fees.....we just stopped the entire monitoring process...we don't want to go back to monitoring if we don't have to.....it's labor intensive for us....

I attended a webinar that stated if we totally do away with transaction limitations then at some point we are going to have to classify savings accounts as transaction accounts which we don't want to do....the suggestion made was to limit to 24 transactions....we don't want to do this if it is not necessary to do....

Without a final rule that defines a savings account, are we ok to still not change anything for now?

Have our disclosures still show the 6 limitations and just not enforce it?

The instructor from that webinar must not have read the FAQs.

How did the recent amendments to Reg D impact Reg CC?
On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six per month limit on convenient transfers from “savings deposits.” Among other things, the interim final rule amended the definition of “transaction account” in 12 CFR 204.2(e) such that the definition now includes accounts described in 204.2(d)(2) (savings deposits).

Regulation CC provides that an “account” subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC “account” definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC.

Yes, you have the option to sit and wait for a final rule that may clarify the distinction (if any) between a savings deposit and a transaction account. You can leave your disclosures as is if there is any chance you will revert to enforcing the old limits. But I do hope you informed customers that the limits were suspended until further notice.

Yes, Brian...I agree....that is why I'm having a hard time with this....

Thanks so much, John....

To be fair with that instructor, Compliance504 (and it could have been me), the Reg CC question was "out there" for several days before the Fed added the clarification to its FAQ on Savings Accounts. I remember wondering about any Reg CC implications soon after the definitions in Regulation D were announced.

It wasn't you, John....in this webinar, the FAQ clarification on Reg CC was included in the materials...but the advice given was to keep withdrawal limitations on savings accounts...because without them you'd have transaction accounts.....

So it left me confused on what to advise Mgmt.....

For now, we are just going to continue what we've been doing.....we understood that there was no notice requirement and documented that we would notify customers once "permanent" changes were made.....

However, since we don't know how long it will be for the final rule....I'm suggesting that we do now notify customers that until further notice, enforcement has been suspended....

So opening this back up on the subaccount disclosure...I had read the conversation on this back in May but our bank was continuing doing the FR2900 under the assumption it was temporary. Now that it has been clarified that is permanent, I have a question on our online account opening disclosure. It is an all in one disclosure and includes the subaccount organization verbiage. For it to be removed, the vendor that created it states it could take 4-6 weeks. Could we continue opening accounts with the current disclosure? How big of an issue would this be?

Since the Board eliminated all reserve requirement in March 2020 - of what value is this program anymore besides totally confusing both your employees and customers with it? If you are still paying residual income to your vendor that helped set up this scheme - you might want to take a real close look at your contract. I highly doubt you will ever see the Federal Reserve use this sort of reserve requirement again under the more current and updated monetary policies.

If you are eliminating the program - then send a change of terms notice to all existing accountholders and include that with your current account opening disclosures until the contract can be amended.

I don't think anyone even understood what it was and why we even had to give it out to begin with. It didn't affect the customer in any way, just something that adjusted when we did our call report.

When the change to Reg D came out last year we stopped monitoring our accounts for excessive withdrawals. We also suspended the debit item charge that we charged when they exceeded a certain number of withdrawals. I put the statement on our TIS disclosures and on our statements that "Due to the Covid 19 Pandemic the bank was suspending the debit item charge effective 5-1-2020 until 3-31-2021. Since that time has lapsed we want to start charging again for the exceeded transactions. My question is do I need to send a 21 day or 30 day notice to all Savings and Money Market customers that we will be charging again and have to wait until that time is up before we can charge them?

Thanks!

Technically probably not, but I would have put another statement message reminding your customer that the fee was going to resume on 04/01 as originally communicated.

Thanks Randy!

We are debating whether we should start monitoring/charging this fee again and wanted to see how many banks are charging vs. not charging

We no longer monitor for excessive withdrawals. I tried to vote on your poll but it states I am not allowed to vote in polls...

Polls no longer work on BOL. What are you trying to accomplish with reinstituting the fee?

Certain regulators might consider this one of the "junk fees" they've been crusading against if the bank is one they examine for consumer compliance.

Randy - I am assume generate revenue. John - I agree and the process is manual. I have asked enough questions to determine the labor and postage is more expensive than the fee income so I'm kind of confused we are still discussing this.