Full text of Mimeograph Letters and Statements of the Board : Interpretation of Law or Regulation: Absorption of Cost of Printing Customers' Names on Checks as Constituting Payment of Interest Under Regulation Q, Number X-9846, Volume 46, Page 139

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X-9846
Reg. Q-29.
INTERPRETATION OF LAft OR REGULATION
(Copies to be sent to all Federal reserve banks)
March 18, 1957.
Mr.
Vice President and Cashier,
National Bank in
__
j
Dear Sir:
This refers to your letter of March 8, 1957 regarding
the question whether the absorption by your bank of the expense
of printing customers' names on checks or the numbering thereof
would be considered a payment of interest within the meaning of
section 19 of the Federal Reserve Act and Regulation Q.
The regulation as amended effective February 11, 1957
contains the following provision;

"Within this regulation, any

payment to or for the account of any depositor as compensation
for the use of funds constituting a deposit shall be considered
interest."
For the present the Board of Governors will not attempt
to issue detailed interpretations or rulings with reference to
questions as to whether the absorption of certain expenses constitutes a payment of interest, but will rely upon the cooperation
and good faith of the member banks in adapting their practices
to conform to the spirit and purpose of the statutory provisions
prohibiting the direct or indirect payment of interest on demand
deposits.




The determination of such questions involves a due

X-S846
Reg. 0-29.
-2-

recognition of the spirit and intent of the law and the exercise
of judgment on the part of the bank in the light of the provisions
of the regulation.and of all the circumstances of the case.

If,

after considering such a question in this light, there appears to
be any serious problem with respect to the matter, it is believed
that it can best be handled in due course upon a review of all the
facts shown by the records of the bank and the examiner1s reports,
if the necessity arises.

The Board trusts that through the co-

operation of the member banks in this matter the necessity for numerous detailed rulings on the subject may be avoided.




Very truly yours,
(Signed)

Chester Morrill,

Chester Morrill,
Secretary.