Important Regulatory Topic
Regulation D – Annual Adjustments
The Federal Reserve Board (FRB) has amended Regulation D (Reserve Requirements of Depository Institutions) to reflect the annual adjustment of two key dollar amounts that are used by financial institutions to determine their required reserves.
Reserve Requirement Exemption Amount – the amount of the total reservable liabilities that is subject to a 0% reserve requirement has increased from $16.9 million to $21.1 million.
Low Reserve Tranche – the amount of new transaction accounts that could be subject to a reserve requirement ratio of new more that 3% has been increased from $127.5 million to $182.9 million.
New Reserve Requirements [§204.4]
Net Transaction Accounts
• $0 – $21.1 million
• > $21.1 – $182.9 million
• > $182.9 million
Nonpersonal Time Deposits
Weekly Reporters – these changes are effective for the 14-day computation period that begins 12/15/20 and for the 14-day reserve maintenance period that begins 01/14/21.
Quarterly Reporters – these changes are effective for the 7-day computation period that begins 12/15/20 and for the 12-day reserve maintenance period that begins 01/14/21.
Reference: Federal Register; December 11, 2020; pp. 79811 – 79823
Regulatory Questions and Answers
For time accounts with maturity longer than one year that do not renew automatically, is the bank required to provide disclosures?
For time accounts with a maturity longer than one year that do not renew automatically at maturity, institutions must disclose to consumers the maturity date and whether interest will be paid after maturity. The disclosures must be mailed or delivered at least 10 calendar days before maturity of the existing account.
Reference: 12 CFR 1030.5(c) and Official Staff Interpretation 1030.5(c).
If a consumer voluntarily closes an account, does the bank need to report it to the Consumer Reporting Agency?
If the bank furnishes information, when a consumer voluntarily closes an account, the bank must notify the (Consumer Reporting Agency) CRA the next time the bank reports information that would have contained information about that account.
Reference: Fair Credit Reporting Act, 15 USC 1681; section 623(a)(4).