The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
2?7
X-9508
INTERPRETATION
BANKING ACT OF' 1955
(Copies to be sent to all Federal reserve ba.nks)
February 27, 1936.
Mr. J. H. Case,
Federal Reserve Agent,
Federal Reserve Bank of New York,
New York, New York.
Dear Mr. Case:
This refers to your letter of February 15, 1936, presenting certain questions arising under the provisions of Regulation Q.
You ask to be advised of the Board's views upon the
question whether deposits of municipalities and subdivisions or
departments thereof, such as sinking fund commissions, boards of
education, and police and fire departments, and deposits of funds
of a municipality set aside for playground and other similar purposes, may be classified as savings deposits under the definition
contained in section
1(~}
of Regulation Q.
In the opinion of the
Board, deposits of the type described above may not be classified
as savings deposits within the meaning of section l(e) of Regulation Q because municipal corporations may not be considered as
organizations operated primarily for religious, philanthropic,
charitable, educational, fraternal or other similar purposes, nor
may it be considered that the beneficial interest in deposits of
such corporations is in one or more individuals.
278
X-9508
-2-
The Board is also of thG opinion that a deposit in the
name of a municipality consisting of funds given to the municipality for a charitable purpos8, such
a;~ th~:
erection of a memorial
gate, may not be classified as a savings ci.oposit.
The Board belioves
that a construction of the regulation which would permit funds of a
municipal corporation held for a charitable pu:rpose to be considered
as funds held for one or mo:;.·e individuals on the theory that the
public consists of a grour~ of individuals would open the door to
evasions of the regulation.
As indicated j_n your letter, such a
construction would seem. to involve an extension of the lcmguage of
the regulation, which bases the privilege o:": maintaining a savings
deposit upon the
DEl ture
of the cie:)osi tor or the person holding the
beneficial interest in the deposit rather than upon the purpose for
which the funds are to be used.
With regard to deposits of close corporations operated
for profit, where all of the stock of the corporation is owned by
one individual or by members of a family, the Board agrGes with your
o:oinion that such depositG may not be classified as savings depos:i.ts
under the definition contain:.;d :Ln ~1oction l(c;) of R-:;gulation Q.
You also present the following question arising under
,,
section 4( d) of Reb1Jl:.:ttion Q:
If a time deposit which has been such
for two and one-half months is then paid before maturity, and in·terest has actually been paid by check at the end of each thirty day
interest period or has been credited to tl1e depositor on tho books of
X-9508
-5-
the bank at the end of each thiN:.y day interest period, should the
member bank, on paying the deposit before maturity, deduct from
the principal of the deposit the amount of the interest so paid or
credited?
In the opinion of the Board the above question should
be answered in the negative.
Section 4(d) of Regulation Q provides
for the forfeiture of "accrued and unpaid" interest, but it is the
view of the Board that interest which has been paid by check or
credited to a depositor's account at the end of a regular interest
period should not be considered as
11
accrued and unpaid" interest
and, therefore, such interest is not subject to the forfeiture.
Very truly yours;
{Signed)
L. P. Bethea
L. P. Bethea,
Assistant Sec.;:·etary.
@FedFRASER