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Federal Reserve Bank OF DALLAS T O N Y J . SALVAGGIO DALLAS, TEXAS 75265-5906 F IR S T V IC E P R E S ID E N T March 16, 1994 Notice 94-39 TO: The Cashier or Individual Responsible for Managing the Reserve/Clearing Account at the financial institution addressed SUBJECT Policy Change Regarding Overnight Overdrafts in Reserve/Clearing Accounts DETAILS To achieve equitable treatment of all account holders and promote sound banking practices, the Federal Reserve believes that reserve/clearing balance accounts should be maintained on a positive daily settlement basis. In the continuing effort to reduce payment system risk, the Federal Reserve has recently revised its Overnight Overdraft Policy. The following changes have been made to the policy and will be effective April 1, 1994: The monetary penalty for an overnight overdraft will be calculated at a rate that is four percentage points above the effective Federal Funds rate prevailing on the date the overdraft occurred. The minimum monetary charge per occurrence will be retained at $100. The current penalty rate floor of ten percent has been eliminated. For those institutions that incur an excessive number of overdrafts, the monetary penalty rate will be increased. Specifically, for each overnight overdraft occurrence over three, in a moving 12-month period, the monetary penalty rate will be increased by one percentage point. These increases would be cumulative, with an additional one percentage point added for each occurrence. For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - MORE INFORMATION For more information, please contact the Reserve Management Division at (214) 922-5646 at the Dallas Office. Depository institutions in the El Paso territory should contact the Reserve Maintenance Division in the El Paso Office at (915) 521-8213. Depository institutions in the Houston territory should contact the Reserve Maintenance Division in the Houston Office at (713) 652-1538. Depository institutions in the San Antonio territory should contact the Reserve Maintenance Division in the San Antonio Office at (210) 978-1426. For additional copies of this B a n k ’s notice, please contact the Public Affairs Department at (214) 922-5254. Sincerely