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F ederal R eser ve Bank OF DALLAS W IL L IA M H . W ALLACE DALLAS, TEXAS 75222 f i r s t VICE PRESIDENT May 5, 1988 AND CHIEF OPERATING OFFICER Circular 88-31 TO: The Daylight Overdraft Coordinator or the Chief Executive Officer of the financial institution addressed SUBJECT Implementation of recent changes in the Federal Reserve's daylight overdraft program — reduction of sender net debit caps DETAILS On July 30, 1987, the Federal Reserve Board adopted several changes in its daylight overdraft policy, one of which concerned the reduction of sender net debit caps. The text of these changes was provided to financial institutions in Circular 87-54, dated August 4, 1987. This circular gives additional details about the current cap reductions. Reduction of Sender Net Debit Caps According to the policy, the current levels of sender net debit caps were to be reduced by 25 percent in two stages. An initial 15 percent reduction went into effect January 14, 1988. The remaining reduction to a level 25 percent lower than the original caps will become effective May 19, 1988. The cap levels, set as multiples of adjusted primary capital, will be as follows: May 19, 1988 and After Net Debit Cap Cap Class Single-Day Avg. High Above Avg. Avg. No Cap 2.25 1.875 1.125 0.0 Plus Two-Week Avg. 0.0 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). 1.50 1.125 0.75 This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - An institution is expected to avoid incurring daylight overdrafts that, on average over a two-week period, exceed the two-week average cap, and, on any day, exceed the single-day cap. Since an institution establishes a cap category (i.e., high, above average, average) based on a self-evaluation, it will not be necessary to resubmit a board resolution in light of the cap reductions. The cap reductions do not affect de minimis caps. MORE INFORMATION For further questions concerning cap reductions, please contact Assistant Vice President John R. Phillips at (214) 651-6265, Robert G. Feil, Manager, at (214) 651-6690, Paul T. Elzner, Daylight Overdraft Analyst, at (214) 698-4439, or James D. Smith, Daylight Overdraft Analyst, at (214) 651-6140. 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,