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F ed er a l Reser ve Ba n k o f D allas
DALLAS, TEXAS
75222
Circular No. 77-44
April 4, 1977
A M E N D M E N TS TO R E G U LA TIO N Q
T O A L L MEMBER BANKS
A N D O THERS CO NCERNED IN THE
E LE V E N TH FE DE RAL RESERVE D IS T R IC T :
T h e Board of G o v e rn o rs of the Fe dera l R e s e rv e System has a p p ro v e d two
amendments to Section 2 1 7 . 4 ( d ) ("P e n a lty for e a r ly w i t h d r a w a l " ) of Regulation Q .
T h e fi r s t am endm ent changes the s tr u c tu r e of the c u r r e n t p a r a g r a p h of R e gulation Q
that states the B o a rd 's e a r l y w it h d r a w a l p e n a lty r u le and exceptions to that r u le by
p r o v id in g a lis tin g of those e x c e p tio n s . T h e second amendm ent adds an additional
e xception to the B o a rd 's e a r l y w it h d r a w a l p e n a lty r u l e . T h a t am endment p ro v id e s
that w h e re a d e pos itor who m aintains time deposits in two o r more m e rg in g banks
loses F e d era l deposit in s u ra n c e c o ve ra g e on a p o rtio n of his or h e r time deposits as
a r e s u lt of the m e r g e r , the s u r v i v i n g m em ber b a n k may pay before m a t u r i t y , w it h
out imposing the R e g u latio n Q p e n a lty for e a r l y w i t h d r a w a l , that p ortion of the d e
p os itor's time dep o s it that is no lo n g e r c ove re d b y F e d e ra l deposit in s u ra n c e .
Both amendments a re e ffe ctive as of M a rc h 24, 1977, and the section, as
am en d e d , is p r in te d on the r e v e r s e of this c i r c u l a r .
M em ber ba nks and others that m ain tain R e gulations B in d e rs should file
these amendments in th ie r b i n d e r s . C i r c u l a r N o. 7 6 -1 6 0 , w h ic h contains the p r i o r
w o rd in g of Section 2 1 7 . 4 ( d ) , should be r e ta in e d since footnotes c o n ce rn in g Section
2 1 7 . 7 ( b ) a r e found th e r e also.
A n y questions c o n c e rn in g the amendments to R egulation Q should be d i
rected to R ic h a rd B . West o r Eugene Coy of our R egulations D e p a rtm e n t, E x t. 6171.
A d d itio n a l copies of the amendments w i ll be fu r n is h e d upon re q u e s t to the S e c re
t a r y 's O ffice of this B a n k , E x t . 6267.
S in c e r e ly y o u r s ,
R o b e rt H . B o y k in
F i r s t V ic e P re s id e n t
Banks and others are encouraged to use the follo w in g t o ll-fr e e incoming WATS numbers in contacting th is Bank:
1 -8 0 0-492-4403 (intra s ta te ) and 1 -8 0 0 -5 2 7 -4 9 7 0 (in te rs ta te ). For c a lls placed lo c a lly , please use 651 plus the
extension referred to above.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
INTEREST ON DEPOSITS
A M EN D M EN TS TO R E G U L A T IO N Q f
Effective M arch 24, 1977, Section 217.4(d) is
am ended as follows:
cate on behalf o f the holder o r prospective p u r
chaser of a certificate issued under th at subpart.
A m em ber bank m ay not, however, repurchase
SEC T IO N 217.4— P A Y M E N T O F T IM E
such certificates for its own account. Provided
D E PO SIT S B E F O R E M A T U R IT Y
further, T h at a tim e deposit m ay be paid before
* * * * *
m aturity w ithout a reduction or forfeiture of in
(d)
Penalty for early withdrawals. W here a time terest as prescribed by this paragraph in the
following circumstances:
deposit, or any portion thereof, is paid before
m aturity, a m em ber bank may pay interest on the
(1) W here a m em ber bank pays all or a portion
am ou nt w ithdraw n at a rate not to exceed that
of a time deposit upon the death o f any person
currently prescribed in §217.7 for a savings de
whose nam e appears on the time deposit pass
posit: Provided, T h at the depositor shall forfeit
book or certificate;
three m onths of interest payable at such rate. If,
(2) W here a m em ber bank pays all o r a portion
however, the am ount w ithdraw n has rem ained on
of a tim e deposit representing funds contributed
deposit for three months or less, all interest shall
to an Individual R etirem ent A ccount o r a Keogh
be forfeited. W here necessary to comply with the
(H.R. 10) plan established pursuant to 26 U.S.C.
requirem ents of this paragraph, any interest al
(I.R.C. 1954) §§408, 401 when the individual for
ready paid to or fo r the account of the depositor
whose benefit the account is m aintained attains
shall be deducted from the am ount requested to
age 59V2 or is disabled (as defined in 26 U.S.C.
be w ithdraw n.11 A ny am endm ent of a time deposit
(I.R.C. 1954) §72(m)(7)) or thereafter; or
contract th at results in an increase in the rate of
interest paid o r in a change on the m aturity of
(3) W here a m em ber bank pays th at portion
the deposit constitutes a paym ent of the time
of a time deposit on w hich Federal deposit insur
deposit before m aturity. Provided further, T h at
ance has been lost as the result of the m erger of
Investm ent Certificates issued in negotiable form
two or m ore Federally insured banks in which
by a m em ber bank pursuant to subpart 3 of
the depositor previously m aintained separate time
§217.7(b) m ay not be paid before m aturity. This
deposits, for a period of one year from the date
provision does not prevent a m em ber bank from
of the merger.
arranging the sale or purchase of such a certifi
% s{: :}? #
t
For this Regulation to be complete as amended effective March 24, 1977:
1) Printed Regulation pamphlet as amended Decem ber 4, 1975;
2 ) Supplement effective Decem ber 4, 1975;
3) Amendments effective March 1, 1976, to Sections 2 1 7 . 1 ( e ) ( 3 ) , 2 1 7 . 5 ( c ) ( 3 ) , and 2 1 7 .6 ( i ) ;
4 ) Am endent effective July 26, 1976, to Section 217.1 (f ) (3 ) (i);
5) Am endment effective Novem ber 8, 1976, to footnote 2 to subparagraphs ( b ) ( 2 ) and ( b ) ( 3 ) o f the
Supplement (Section 21 7 .7 ); and
6 ) This slip sheet.
11 The provisions o f this paragraph apply to all time deposit contracts entered into after July 5, 1973, and to
all existing time deposit contracts that are extended or renewed (whether by automatic renewal or otherwise)
after such date, and to all time deposit contracts that are amended after such date so as to increase the rate of
interest paid. A ll contracts not subject to the provisions o f this paragraph shall be subject to the restrictions of
§ 2 1 7.4(d ) in effect prior to July 5, 1973, which permitted payment o f a time deposit before maturity only in
an emergency where necessary to prevent great hardship to the depositor, and which required the forfeiture of
accrued and unpaid interest for a period of not less than 3 months on the amount withdrawn if an amount
equal to the amount withdrawn had been on deposit for 3 months or longer, and the forfeiture o f all accrued
and unpaid interest on the amount withdrawn if an amount equal to the amount withdrawn had been on de
posit less than 3 months.
3 - 24-77
@FedFRASER