View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Federal Reserve bank

OF DALLAS
W IL L IA M

H. W ALLACE

DALLAS, TEXAS 75222

FIRST VIC E PR ES ID EN T
AND CH IEF O PER ATING O FFICER

August 31, 1987
Circular 87-60

TO:

The Daylight Overdraft Coordinator
or the Chief Executive Officer of
the Depository Institution Addressed
SUBJECT

Implementation o f recent changes in the Federal Reserve's d aylight
o verd raft program— De Minimis Caps
DETAILS

On July 30, the Federal Reserve Board adopted several changes in its
daylight overdraft policy, one of which concerned de minimis caps. The text
of these changes was provided to depository institutions in our Circular
87-54, August 4, 1987. This circular gives additional details about imple­
menting de minimis caps.
De Minimis Caps
A de minimis cap equal to the lesser of 20 percent of adjusted pri­
mary capital or $500,000 is now available. A de minimis cap does not require
self-evaluation.
It must, however, be approved by the depository institu­
tion's board of directors, or the board of a parent holding company, and the
approval must be renewed annually. Attachment A contains a summary of de
minimis caps and a comparison with positive sender net debit caps.
A depository institution may place itself under a de minimis cap by
sending a copy of a board resolution to that effect to:
Mr. Paul T. Elzner
Daylight Overdraft Analyst
Financial Planning and Control Department
Federal Reserve Bank of Dallas
Station K
Dallas, Texas 75222

For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

-

2

-

The deadline for submitting such resolutions is December 3, 1987.
Attachment B contains sample wording for such a resolution.
An alternative method during the initial transition period is to send
Mr. Elzner a letter requesting the de minimis cap. This should be received
before December 3, 1987; if this is done, the resolution confirming that
action may then be provided to Mr. Elzner no later than March 31, 1988.
A depository institution which has a zero cap because it has not
filed a self-evaluation or because its self-evaluation does not qualify it for
a positive cap must notify us of its decision to request a de minimis cap no
later than December 3, 1987. If it does not do so and continues to incur
daylight overdrafts, action will be taken to prevent subsequent daylight over­
drafts on Fedwire.
The de minimis cap is not suitable for an institution which incurs
overdrafts greater than permitted by the de minimis cap, even if it does so
only occasionally, or one which incurs frequent daylight overdrafts of any
s e
iz .
Other Matters
Circulars will follow with similar implementing information on other
recent changes to the daylight overdraft policy. These will include inter­
affiliate Fedwire transfers, third-party initiation of Fedwire transfers, the
$50 million limit on book-entry securities transfers over Fedwire, and cap
reductions.
ATTACHMENTS

Attachment A contains a summary of the de minimis cap and a compari­
son with positive sender net debit caps. Attachment B contains sample wording
for a board of directors resolution approving the use of daylight credit up to
the level of the de minimis cap.
MORE INFORMATION

For further information about de minimis caps, or about the selfevaluation process and submitting or updating positive sender net debit caps,
please contact Assistant Vice President John R. Phillips at 214-651-6265, Mr.
Robert G. Feil, Manager, at 214-651-6690, or Mr. Elzner at 214-698-4439.
For general questions about the daylight overdraft program, please
contact any of the above individuals or Senior Vice President George C.
Cochran, III, 214-651-6257, Senior Vice President James L. Stull,
214-698-4286, Vice President Robert D. Hankins, 214-651-6120, or Vice
President Larry M. Snell, 214-651-6199.
Sincerely yours,

ATTACHMENT A

SUMMARY AND COMPARISON - DE MINIMIS AND POSITIVE CAPS

I.

De minimis cap
- Available for institutions that incur small and infrequent daylight
overdrafts.
- Exempts institutions from performing self-evaluation.
- Requires board of directors'

approval on an annual basis.

- Allows institutions to incur daylight overdrafts up to thelesser of
percent of adjusted primary capital or $500,000.

20

- Must be submitted by December 3, 1987. (Institutions may submit a
letter to request the de minimis cap by the above deadline, which must
then be followed by a board of directors' resolution no later than
March 31, 1988.)
II.

Positive Cap
- Available for institutions that incur daylight overdrafts larger than
permitted by the de minimis cap, even if only occasionally, or for
institutions that incur daylight overdrafts on a regular basis
regardless of size.
- Requires the institution to
least an average rating.

perform aself-evaluation which yields at

- Self-evaluation worksheets can be found in the Payments System Risk
Manual beginning on page B-163.
- Requires board of directors' resolution to be submitted on an annual
basis.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102