MMAs and sweep accounts

Posted By: DeeQ

MMAs and sweep accounts - 04/05/13 01:22 PM

I have seen tons of banks offer this MMA sweep account feature for the business customers. Doesn't Reg D restrict the sweeping back into the checking account? How does the bank get aroun that rule?
Posted By: John Burnett

Re: MMAs and sweep accounts - 04/05/13 01:26 PM

Yes, the sweeps back to the DDA account are limited under the "six per month" rule in section 204.2(d)(2). The sweep arrangement may include a provision stating that funds are swept FROM the MMDA only once a week. Or that no more than 6 sweeps from the MMDA will be completed in a given month.
Posted By: rlcarey

Re: MMAs and sweep accounts - 04/05/13 01:56 PM

Or, the MMA account is really classified as an interest bearing checking account by the institution.......
Posted By: DeeQ

Re: MMAs and sweep accounts - 04/05/13 02:35 PM

SO it would be OK to name it a MMA if it was reserved for as a checking account? (That was my original thought, but reading D made me think not.)

And thank you both. smile
Posted By: rlcarey

Re: MMAs and sweep accounts - 04/05/13 03:05 PM

That can call the product a SDSA (super duper savings account) if they wanted to. An account name is only an account name.
Posted By: DeeQ

Re: MMAs and sweep accounts - 04/05/13 03:22 PM

Great, thanks! smile
Posted By: Elwood P. Dowd

Re: MMAs and sweep accounts - 04/09/13 02:11 PM

The sweep mechanism was contrived to get around the customer's ineligibility for a NOW account. Now that bank's can offer interest bearing DDA's to anyone, it no longer serves a purpose. If you want to pay interest to corporate customers you may design a product for that purpose...