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46 BOARD OF GOVERNORS I OF" THE FEDERAL RESERVE SYSTEM H.-963 WASHINGTON ADORES& OFFICIAL CCRREBPCNOENCE TC THE BCARO Februar;r 21, 1942 Dear Sir: Pursuant to the Board's telegram of this date there is set forth below the text of a resolution wh:luh. has been adopted by the Board amending its Regulation D: "RESOLVED, That Regulation D, Reserve.s of Member Banks, is hereqy amended in the following respects, effective with the reserve compUtation period beginning February 28, 1942: "1. Subsection (a) of section 3 of Regulation D is amended to read as follows: "'(a) Cgmputation Qf deficienoi~s. " 1 (1) Deficiencies in reserve balances of member banks in central reserve cities and in resarve citias shall be computed on the basis of average O.aily net deposit bal-ances covering weekly periods. Dvficiencies in reserve balances of other memoor banks shall be computed on the basis of average daily net deposit balances covering se~imonth~ periods.S · "'(2) In computing such deficiencies the required reserve balance of each member bank at the close of business each day shall be based upon its net deposit balances at the opening of business on the same d~?; and the weekly and semimonthly periods referred to in paragraph (1) hereof ·~ Deficiencies in reserve balances of member banks in outlying sections of central reserve anc,l reserve cities which have been authoriz~ 'l:u the Board of Gove1·nors of the Federal Reserv~ System, tmder the pro·· visions of sub~ection (a.) of section 2 of this regulation, to maintain seven per cent reserves against demand deposits, will also be computed on the basis of average 4ail.J net d.eposit b~la.:nces covering se1nimonthly periods.' 47 R-963 -2shall end at the close of business on days to be fixed by the Federal Reserve banks with the approval of the Board of Governors of the Federal Reserve System.' "2. Section 4 of Regulation D is amended to read as follows: 111 SECTION 4. LOANS AND DIVIDENDS WHILE RESERVES AI\E DEFICIENT It is unlawful i'or any member bank the reserves of which are deficient to make any new loans or p~ any dividends unless and until the total reserves required qy law are fully restored, and the p~ment of penalties for deficiencies in reserves does not exempt member banks from this prohibition of law. As provided in section 3 of this regulation, penalties !'or deficiencies in reserves are computed on the basis of the average reserve balances for week4' or semimonthly periods; but this prohibition of law applies whenever the reserves are deficient i'or one day or mora, regardless of whethGr or not the average reserve balance? for the weekly or semimonthly plilriod are def:i.cient. 11' 111 L. P. Bethea, Assistru1t Secretar,y. TO THE PRESIDEJnS OF ALL l!"EDF.RAL RESERVE BANKS
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