As a result of the Federal Reserve Board reducing reserve requirements for transaction accounts to zero percent, the Board noted “the retention of a regulatory distinction in Regulation D between reservable “transaction accounts” and non-reservable “savings deposits” is no longer necessary.” As a result, the Federal Reserve Board has announced an interim final rule effective on April 24, 2020 that removed Regulation D transaction limitations (six per month) from savings deposits. The interim final rule allows, in part, financial institutions to suspend excessive activity monitoring and customer notification procedures for savings and money market accounts.
Under the interim final rule, the term “savings deposit” means 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 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.
In addition to the interim final rule, the Federal Reserve Board has issued technical guidance on the changes made by updating its document titled ““Savings Deposits Frequently Asked Questions”. Financial institutions should review the interim final rule and updated “Savings Deposits Frequently Asked Questions” supplement, along with its deposit account agreements and Truth in Savings disclosures for savings and money market products to determine any changes to policy and procedures as well as to determine if any action should be taken to notify customers of any possible changes that will take place as a result of the interim final rule.
It should also be noted this is an interim final rule with a comment period open until June 29, 2020; therefore, we expect more clarification on a few items not specifically delineated in the “Savings Deposits Frequently Asked Questions” supplement.
On May 13, 2020, the Federal Reserve added additional information to its “Savings Deposits Frequently Asked Questions” supplement that covered some previously unanswered questions. The updates include FAQ #3 which indicates that removing the transaction limits from savings accounts is not expected to be a temporary measure and FAQ #13 which notes that the recent changes to Regulation D do not result in savings deposits now being covered by Regulation CC.
To access the Federal Reserve Board’s article, use the following link:
To access the “Savings Deposits Frequently Asked Questions” supplement, use the following link: