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F ederal Reserve b a n k o f Dallas DALLAS. TEXAS 75222 C i r c u la r No. 75-160 October 21, 1975 AMENDMENTS TO REGULATIONS D AND Q D e f in itio n of S a v i n g s D e p o s i t s T O ALL MEMBER BANKS AND O TH ERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE D IS T R IC T : Q u o t e d b e l o w is t h e t e x t of a s t a t e m e n t i s s u e d O c t o b e r 2, 1975, b y t h e B o a r d of G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s t e m : T h e B o a r d of G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s t e m t o d a y a m e n d e d t h e d e f i n i t i o n of s a v i n g s d e p o s i t s in its R e g u l a t i o n s D a n d Q , to p e r m i t c o r p o r a t i o n s , p a r t n e r s h i p s , a n d o t h e r p r o f i t m a k i n g o r g a n i z a t i o n s to m a i n t a i n s a v i n g s a c c o u n t s at m em ber b a n k s . T h e a m e n d m e n t s , e f f e c t i v e N o v e m b e r 10, 1975, p l a c e a c e i l i n g on b u s i n e s s s a v i n g s d e p o s i t s of $ 1 5 0 ,0 0 0 . T h e d o l l a r c e i l i n g is i n t e n d e d to m a k e s u c h a c c o u n t s a t t r a c t i v e c h i e f l y to s m a ll b u s i n e s s e s t h a t d o n o t h a v e a c c e s s to t h e m o n e y m a r k e t s to e a r n i n t e r e s t on te m p o r a r ily idle f u n d s . S a v i n g s a c c o u n t s h a v e n o t p r e v i o u s l y b e e n a v a i l a b l e , in g e n e r a l , a t m e m b e r b a n k s to p r o f i t m a k i n g b u s i n e s s o r g a n i z a t i o n s . T h e y h a v e b e e n a v a i l a b l e a t s a v i n g s a n d loan a s s o c i a t i o n s a n d o t h e r t h r i f t i n s t i t u t i o n s . T h e r e g u l a t o r y a m e n d m e n t s a n n o u n c e d t o d a y w i l l , t h e r e f o r e , e n a b l e m e m b e r b a n k s to c o m p e t e m o r e effectiv ely w ith s a v in g s in s titu tio n s. T h e B o a r d a s k e d t h e b a n k s to c l a s s i f y t h e i r b u s i n e s s s a v i n g s a c c o u n t s a s a s e p a r a t e item f o r r e p o r t i n g p u r p o s e s . In M a s s a c h u s e t t s a n d N ew H a m p s h i r e , w h e r e t h e law p e r m i t s f i n a n c i a l i n s t i t u t i o n s to o f f e r d e p o s i t s s u b j e c t to n e g o t i a b l e o r d e r s of w i t h d r a w a l (NOWs— c h e c k l ik e u s e o f i n t e r e s t b e a r i n g d e p o s i t s ) , s u c h a c c o u n t s w ill c o n t i n u e to b e a v a i l a b l e o n l y to i n d i v i d u a l s a n d o t h e r q u a l i f y i n g o r g a n i z a t i o n s . B u s i n e s s e s a r e n o t e l i g i b l e to e s t a b l i s h NOW a c c o u n t s . In s u b m i t t i n g t h e a m e n d m e n t s f o r p u b l i c a t i o n in t h e FEDERAL R E G IS T E R , t h e B o a r d of G o v e r n o r s m ade th e follow ing statem en t: O n J u n e 5, 1975 t h e B o a r d i n v i t e d p u b l i c c o m m e n t s to b e s u b m i t t e d b y J u l y 25, 1975 o n p r o p o s e d a m e n d m e n t s to its R e g u l a t i o n D ( R e s e r v e s of M e m b e r B an k s) a n d R e g u la tio n Q (In te re s t on D ep o sits) th a t w ould p e r m it m em b e r b a n k s This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - to c l a s s i f y f u n d s of c o r p o r a t i o n s , a s s o c i a t i o n s , a n d o t h e r o r g a n i z a t i o n s o p e r a t e d f o r p r o f i t a s s a v i n g s d e p o s i t s (40 FEDERAL REGISTER 25031) . A s p r o p o s e d , t h e a m e n d m e n t s w o u l d h a v e p e r m i t t e d m e m b e r b a n k s to a c c e p t s a v i n g s d e p o s i t s f r o m s u c h o r g a n i z a t i o n s to t h e e x t e n t s u c h f u n d s d o n o t e x c e e d $ 1 0 0 ,0 0 0 p e r d e p o s i t o r a t a m e m b e r b a n k . T h e B o a r d r e q u e s t e d c o m m e n t s fro m t h e p u b l i c c o n c e r n i n g t h e a p p r o p r i a t e n e s s o f s u c h a li m i t a t i o n . A f t e r r e v i e w a n d c o n s i d e r a t i o n o f a ll c o m m e n t s r e c e i v e d , t h e B o a r d h a s d e c i d e d to a d o p t t h e a m e n d m e n t s in a s l i g h t l y m o d i f i e d fo r m to p e r m i t m e m b e r b a n k s to a c c e p t s a v i n g s d e p o s i t s fr o m b u s i n e s s o r g a n i z a t i o n s u p to a m a x i m u m of $ 1 5 0 ,0 0 0 p e r d e p o s i t o r . T h e a m e n d m e n t s h a v e b e e n a d o p t e d in o r d e r to p r o v i d e s m a l l e r b u s i n e s s o r g a n i z a t i o n s , w h i c h d o n o t o r d i n a r i l y h a v e a c c e s s to s h o r t - t e r m m o n e y m a r k e t i n s t r u m e n t s , w ith a m e a n s of r e a liz in g a s h o r t - t e r m r e t u r n on t h e i r f u n d s . T h e s e a m e n d m e n t s w ill a l s o e n a b l e m e m b e r b a n k s to c o m p e t e m o r e e f f e c t i v e l y w i t h o t h e r f i n a n c i a l i n s t i t u t i o n s t h a t a r e p e r m i t t e d to a c c e p t s a v i n g s d e p o s i t s fr o m b u s i n e s s e s . T h e B o a r d a d o p t e d t h e $1 5 0 ,0 0 0 p e r d e p o s i t o r lim ita tio n in o r d e r to lim it t h e c o n c e n t r a t i o n o f a n y p o t e n t i a l l y v o l a t i l e f u n d s in s a v i n g s d e p o s i t s a n d to c o n f i n e t h e e f f e c t s of t h e p r o p o s e d a m e n d m e n t s p r i m a r i l y to sm a ll b u s i n e s s e s . T h e lim ita tio n of $ 1 5 0 ,0 0 0 w a s a d o p t e d i n s t e a d o f t h e $ 1 0 0 ,0 0 0 o r i g i n a l l y p r o p o s e d s i n c e it w a s d e t e r m i n e d t h a t t h e h i g h e r le v e l w o u l d m o r e a d e q u a t e l y a c c o m m o d a t e t h e n e e d s of s m a lle r b u s in e s s e n t e r p r i s e s . T h e a m e n d m e n t s w ill b e c o m e e f f e c t i v e N o v e m b e r 10, 1975. M e m b e r b a n k s sh o u ld m aintain s a v in g s d e p o sits e s ta b lis h e d by b u s in e s s o rg a n iz a tio n s a s a s e p a r a t e d e p o s it c la ssific a tio n for r e p o r tin g p u r p o s e s . In t h o s e s t a t e s w h e r e m e m b e r b a n k s a r e p e r m i t t e d b y law to o f f e r d e p o s i t s s u b j e c t to n e g o t i a b l e o r d e r s o f w i t h d r a w a l ( N O W s ) , s u c h a c c o u n t s w ill c o n t i n u e to b e a v a i l a b l e o n l y to i n d i v i d u a l s a n d o t h e r q u a l i f y i n g o r g a n i z a t i o n s a s p r o v i d e d f o r b y s e c t i o n 2 1 7 .1 (e) of R e g u l a t i o n Q . A f t e r r e v i e w o f all r e l e v a n t m a t t e r p r e s e n t e d , p u r s u a n t to its a u t h o r i t y u n d e r s e c t i o n 19 of t h e F e d e r a l R e s e r v e A c t (12 U . S . C . 461) to d e f i n e t h e t e r m s u s e d in t h a t s e c t i o n , t h e B o a r d h a s d e c i d e d to a d o p t t h e a m e n d m e n t s a s s e t f o r t h b e l o w . C o p i e s o f t h e a m e n d m e n t s to R e g u l a t i o n s D a n d Q a r e e n c l o s e d a n d s h o u l d b e f i l e d in y o u r R e g u l a t i o n s b i n d e r . A d d i t i o n a l c o p i e s o f t h e a m e n d m e n t s wi l l b e f u r n i s h e d u p o n r e q u e s t to t h e S e c r e t a r y ' s O f fic e o f t h i s B a n k . S in c ere ly y o u r s , T . W. Plant First Vice P r e s id e n t E nclosures BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM RESERVES OF MEMBER BANKS A M E N D M E N T T O R E G U L A T IO N D Effective November 10, 1975, § 204.1(e)(1) is amended to read as follows: SECTION 2 04.1— DEFINITIONS * * * * * (e) Savings deposits. The term “savings deposit” means a deposit — (1) That consists of funds deposited to the credit of or in which the entire beneficial interest is held by one or more individuals, or a corporation, association, or other organization operated pri marily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes and not operated for profit;4 or that consists of funds deposited to the credit of or in which the entire beneficial interest is held by the United States, any State of the United States, or any county, municipality, or political subdivision there of, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or political subdivision thereof; or that consists of funds deposited to the credit of, or in which any beneficial interest is held by a corporation, association, or other organization not qualifying above to the extent such funds do not exceed $150,000 per such depositor at a member bank;4* and * * * * * * D eposits in jo in t accounts o f tw o o r m o re individuals m ay be classified a s savings deposits if th ey m eet th e o th e r re q u ire m en ts o f th e ab ove definition. D eposits o f a p a rtn e rsh ip o p e rated fo r profit m ay also be clas sified as savings to th e e x ten t such deposits d o n o t exceed $150,000 p e r p a rtn e rsh ip a t a m e m b e r bank. W h ere a d eposit is to th e credit o f th e b a n k ’s ow n tru st d e p artm en t a n d th e fun ds involved are utilized to cover checks, su ch d eposit m a y n o t be classified as a savings deposit. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM INTEREST ON DEPOSITS A M E N D M E N T T O R E G U L A T IO N Q f Effective November 10, 1975, § 217.1(e)(1) is amended to read as follows: funds deposited to the credit of or in which the entire beneficial interest is held by the United States, any State of the United States, or any SECTION 2 1 7 .1 — DEFINITIONS county, municipality, or political subdivision there of, the District of Columbia, the Commonwealth * * * * * of Puerto Rico, the Virgin Islands, American (e) Savings deposits. The term “savings deposit” Samoa, Guam, or political subdivision thereof; or that consists of funds deposited to the credit of, means a deposit — or in which any beneficial interest is held by a (1) That consists of funds deposited to the credit corporation, association or other organization not of or in which the entire beneficial interest is held qualifying above to the extent such funds do not by one or more individuals, or of a corporation, exceed $150,000 per such depositor at a member association, or other organization operated pri bank; and marily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes and not operated for profit;4 or that consists of * * * * * t F o r this R egulatio n to be com plete as am e n d e d effective N o v e m b e r 10, 1975, re ta in : 1) P rin te d R egulatio n p a m p h le t c o ntainin g R egulatio n Q d a te d Ja n u a ry 1, 1971; 2 ) A m e n d m e n t effective Ja n u a ry 1, 1974, Section 2 1 7 .5 ( c ) ( 4 ) a n d Section 217.6 ( i ) ; 3 ) A m e n d m e n t effective N o v e m b e r 27, 1974, Section 2 1 7 . 1 ( e ) ( 1 ) ; 4 ) A m e n d m e n ts effective D e c em b er 23, 1974, Section 2 1 7 .4 (e ) an d Section 2 1 7 .6 (e ); 5 ) Sup plem ent effective D e c em b er 23, 1974; 6 ) A m e n d m e n t effective M a y 16, 1975, Section 2 1 7 . 1 ( e ) ( 3 ) ; 7 ) A m e n d m e n t effective Ju n e 5, 1975, Section 2 1 7 .4 (d ) a n d a m e n d m en t effective S ep tem b er 1, 1975, Section 2 1 7 .3 (f ); 8 ) A m e n d m e n t effective S ep tem b er 2, 1975, Section 2 1 7 .5 (c ) ; an d 9 ) T h is slip sheet effective o n th e d a te as show n herein. 4 D eposits in jo in t accounts o f tw o o r m o re individuals m a y b e classified as savings deposits if th ey m eet th e o th e r req u ire m en ts of the above definition. D eposits o f a p a rtn e rsh ip o p e rated f o r profit m a y also b e clas sified as savings to th e e x ten t such deposits d o n o t exceed $150,000 p e r p a rtn e rsh ip a t a m e m b e r bank.
@FedFRASER