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444 S-27 Reg. D--6 INTERPRETATION OF LAW OH REGULA'riON (Copies to be sent to all Federal reserve banks} August 5, 1957. Mr. , Vice President, Federal Reserve Bank of -------------' ----------------' Dear Mr. This refers to your letter of June 29, l937 presenting the question whether member banks in (name of city) ma.y, in computing required reserve balances, deduct from their gross demand deposits matured bonds and coupons payable in (same city) which have been roceived by thr:lm and which are still in th8 process of collection. 'fhis involVf;"JS the question whether such matured bonds and coupons may be considered as "cash items in procr:Jss of collection" within th'l m<3aning of S'3Ction l(g) of Regulation D so as to be deductibl'3 from gross demand deposits und0r ssction 2(b) of th0 r0gulation. '. •' From your letter it is understood that (na.I!le of city) banks customarily Give immediats deposit credit, or one day deferred deposit credit, for matured bonds and coupons pa.yable in (same city) whether received ovorthe-colm.ter or through tht:J mails from their depositors and bank correspondents; that such i terns are customarily received £rom correspondent br:tnks in cash letters; ths.t aft(.;r such cash letters have befJn proved, the mc..tured bonds and coupons therein are sortad according to paying agents (and thereafter according to issues and denominations) preparatory to presentation; that where the pay.ing ag~nts are metlbers of the (same city) Cl13aring House Association thf2l coupons ar~;~ cle::1red through th•J Clr:Jaring House, but the matured. bonds nre presented ov(~r-the-counter; that where the paying agents are no't members of the Association, both t.~o matured bonds and coupons are presented over-the-counter; that in th~ case of items cleared through the Clearing House the pres'3nting bank receives c. due bill on the day of cl(laring which due l;lill is cleared on tho following day in the check el.;arings; that in the case of items presr.mted over-the-counter to ·the pey-ing agent, a clearing house check is r<Jceivl3d the same day in pay-· mont fo:t• the items, which check is cl"3ared t;he next dey; t.md that the due bills given for the coupons pres~nted through thu Clearing House and the clearing house checks given for the bonds and coupons presented over~the counter are themselves deductible from gross d.emand deposits. It is also understood that your bank handles matured coupons forwarded by your member b&nks and direct sending banks as cash items, giving one day deferred deposit credit therofor, o.nd in some instP...nces hundles matured bonds oa the above basis and in oth9r instances handles matured bonds as non-cash items. We further understand that the quostion pr'3sented does not refer to maturing bonds and coupons. 3-27 RJg. D-6 -2- f' 445 You ar-.; a;::lvis,~d thnt, aftc:r coiJ.sidering this ;aatt':lr in th0 light of thr.:J f:tcts stll t.;cl abov8, the Boarll of Govurnors is of the opinion that J:1ettu!'i.:Jd bonds and coupons, to the extent that thoy are tr'3ntcd ::mel handlr;;d by r.:er:1b::r bent::s as cc.sh itmas :O>Ubdta:ttiully in ac~ord wi tl1 thB prr,ctice d.s scribed, nay proo0rly bo includ;.;d by such banks in 11 S11Ch othor i t'3:r:ls in prcGe~:1S of collection, pay;:cbl•; iuracdiE-.t'3ly upon pr.':Jsentnticm in thH Uni t'3d Stcctr:Js, o.s o.re custoi~lDrily clear;;d or coll<:Jcted by bnnk3 as cash it'.OL1S 11 , within the rue3Iling of section l(g) (3) of Rl.')i;;Ulat:i.on D, end c:Jckctorl by such br,nks f:i.·m.1 thD a:Jo1.mt uf thr;ir gross c.l-:n:wnd deposits in cor.iput.ing their rc;quirr;C. l'•.:;s:~:::ves. Very truly yours, (Sl' t::.' ._. '""n·>d) \ L • P • Br,th"" "" . . v. ·~ L. P. Bethea, Assistant S'3cretary. 'y I
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