First of all does anyone have any information regarding an indexed powered CD? Our bank is considering offering this as a new product. It is a CD that is tied to the S&P for five years. With this CD you can only go into the product, which is backed by the Federal Home Loan Bank every 18th of each month. This CD does not earn interest until the end of the term and it is based on a 12 quarter average of the s&p. You have the option to terminate the CD annually, but at a penalty decided by the Federal Home Loan Bank. Seems very complicated. Need any advise by individuals that have this product. Especially with regards to Reg CC. If someone come in on the 5th of the month, we can't open the CD until the 18th, therefore, we should put the funds in another account until the 18th. I have been told that they can put this money in any type of account and place a hold for however many days we need it. I believe this would go against Reg CC if it is a consumer dda account. SHouldn't we have to put a Reg CC hold on this type of account? Can we just hold funds and not notify the customer? ANy information appreciated.

I have heard about the S&P Indexed Powered CD, but don't have a lot of help for you on that. Pertaining to Reg CC, this Regulation applies only to checking accounts. It does not apply to savings and CD's. You could deposit the money in a non-covered account and not worry about the availability requirements of Reg CC.

I agree that it could be placed in a savings or money market account for the period of time and wouldn't fall under Reg CC. However, am I right that if we placed the money in a regular DDA account that we would be required to follow Reg CC guidelines if it is a consumer account and the check is not on us.

If you placed the money in a DDA, I think you must follow Reg CC (meaning you have a problem - from your original post). Reg CC doesn't care if it is a consumer or a business (or any other entity).

Thank you for your information. I believe what our operations department is saying is that we are not holding the funds thinking the money isn't good. INstead we are holding the funds just to guarantee that the money will be there when we transfer it to the indexed CD. I think they are going based on Appendix E, section 229.2 (d), which discusses about loans secured by cds.

David D. 1001 posts. Watch out John B!

I can almost see him from here ... and ... what's that dot on the horizon ..... it must be Andy Z.