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X-9573 INTERPRETATION BANKING ACT OF 1935 (Copies to be sent to all Federal reserve banks) May 5, 1936. Mr. S. G. Sargent, Assistant Federal Reserve Agent, Federal Reserve Bank of San Francisco, San Francisco, California. Dear Mr. Sargent: This refers to your letter of April 23, 1936, presenting the question whether, under the terms of the Board's letter of April 13, 1936 (X-9545-a) stating that no objection would be offered to the payment by a member bank of interest after maturity on a time certificate of deposit renewed within ten days after maturity, the bank is required to date the renewal certificate back to the date of maturity of the original certificate. As you know, section 19 of the Federal Reserve Act prohibits the payment of interest on deposits payable on demand, and it appears that when a time certificate of deposit matures on a certain date and is subsequently renewed as of a later date there is an intervening period during which the deposit is payable on demand. It is believed that the position taken in the Board's letter of April 13, 1936, which regards the renewal certificate as taking effect as of the maturity date of the original certificate, represents a liberal interpretation of the statute and in the circumstances it does not appear that an extension of the provisions of —2— X-9575 the letter by the elimination of the requirement that the bank date the renewal certificate back to the date of maturity of the original certificate would be justified. Very truly yours, (Signed) Chester Morrill Chester Morrill, Secretary.
@FedFRASER