Upon updating our Reg DD policy, I've come across the statement "The Bank will not pay interest on demand deposits" Well, we do pay interest on our club checking accounts. So, is this what Reg DD says I can't do?
Those would be classified as NOW (Negotiable Order of Withdrawal) accounts. It's different than a regular demand account. After July 21, the NOW account really becomes obsolete.
oops! we also have NOW accounts that we pay interest on. But, our club accounts are not classified as NOW accounts. They are just regular consumer transaction accounts that pay interest.
And you say that the NOW accounts will be obsolete? So, what do I do with the NOW accounts we have as of now? I guess I was thinking that I would keep them, but just make them available to anyone including corporations.
So then I can't have just a regular checking account that pays interest without it being called a NOW account? I'm just trying to get this clarified. We've carried them for years on our books and not one auditor or examiner have questioned it.
As far as I understand it, Dodd-Frank only repeals Regulation Q which prohibits payment of interest on business demand deposit accounts. It did not affect Regulation D which governs NOW accounts nor did it change the definition of such. Therefore, businesses cannot have a NOW account. A separate interest rate structure and classification must be created for business accounts that will be permitted to earn/pay interest. NOW accounts will only be obsolete when Regulation D has been changed. If you are paying interest on personal accounts, those accounts must be classified as NOW accounts and reported as such on your call report.
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Punishment and recovery are so rare--prevention is the only viable course of action. --Frank Abagnale