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#2260537 - 09/30/21 07:02 PM Regulation D
Paul Offline
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Joined: Jan 2019
Posts: 28
Every bank I have worked at charged a penalty for CDs broken in the first seven days (regulation D), even for business accounts. We have a major multinational firm that wants to open CDs with us for 2 -4 days. When we told them that a penalty would apply for early withdrawal, they said none of their other banks charge a penalty. I called a colleague of mine at another bank, and she told me that they also charge a penalty to businesses and has been told the same by her customers.

Is there an exception for CD/TDs opened by a business to the minimum 7 day early withdrawal penalty rule (Regulation D)?

Thank you

Paul

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General Discussion
#2260538 - 09/30/21 07:13 PM Re: Regulation D Paul
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,548
Galveston, TX
Anything less than 7 days is a demand deposit and not a time deposit:

12 CFR 204.2(c)(1) Time deposit means:

(i) A deposit that the depositor does not have a right and is not permitted to make withdrawals from within six days after the date of deposit unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit.
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#2260546 - 09/30/21 07:41 PM Re: Regulation D Paul
Paul Offline
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Joined: Jan 2019
Posts: 28
Thank you and sorry aging for the duplicate post.

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#2260747 - 10/05/21 09:17 PM Re: Regulation D Paul
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,408
Cape Cod
Because interest can now be paid on demand deposits, larger business with temporary excess liquidity may want to obtain short-term time deposits (under 7 days). It's perfectly legit to offer them, and the Time Deposit early withdrawal fee requirement is not required.

Your CFO may not want to take on this kind of liability, however, if it messes with the bank's asset-liability mix.
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#2263908 - 12/21/21 09:41 PM Re: Regulation D John Burnett
Paul Offline
Junior Member
Joined: Jan 2019
Posts: 28
Thank you, I missed you reply.

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