The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL R ESE R V E BANK OF DALLAS
Station K, Dallas, Texas 7 5 2 2 2
C i r c u l a r No. 84-53
April 11, 1984
TO:
All member banks and others concerned in the Eleventh
Federal Reserve D i s t r i c t
ATTENTION:
Chief Executive Of fic er
SUBJECT:
Policy statement concerning advertisements for time
deposits that pay more than one fixed rate and a
proposal to amend Regulation Q — Interest on
Deposits — to incorporate the substance of the
policy statement into the regulation
SUMMARY:
The Board of Governors of the Federal Reserve System
issued
a
pol icy
statement on March 22, 1984
concerning the advertisement
of
m ul ti p le
rate
accounts.
The po licy statement addresses misleading
a d v e r t i s i n g which in d ic a te s a high r a t e of i n t e r e s t
f o r one period in large p r i n t while p r i n t i n g the
lower r a t e in much smaller type.
The
policy
statement also addresses a d v e r t i s i n g which r e f e r s to
IRA accounts as being t a x - f r e e or tax-exempt.
In a d d i t i o n , the Board is proposing to amend i t s
Regulation Q to incorporate the policy statement into
the r e g u l a t i o n .
I n t e r e s t e d p a r t i e s are i n vi te d to
submit comments to William W. Wiles, S ec r et ar y, Board
of Governors of the Federal Reserve System, 20th
S t r e e t and C on s ti tu ti on
Avenue, N.W., Washington,
D.C., 20551.
Comments must be received by May 22,
1984 and should r e f e r to Docket No. R-0514.
ATTACHMENTS:
Board's
press
release,
pol icy
statement
and
Regulation Q proposal as submitted f o r p u b l i c a t i o n in
the Federal Register
MORE INFORMATION:
Legal Department, Extension 6171
ADDITIONAL COPIES:
Public A f f a i r s Department, Extension 6289
Banks and others are encouraged to use the follow ing incom ing W A T S numbers in contacting this Bank: 1-800-442-7140
(intrastate) and 1-800-527-9200 (interstate). For calls placed locally, 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)
FEDERALRESERVEpressrelease
For immediate r e l e a s e
March 23, 1984
The Federal Reserve Board today issued
a policy statement concerning
advertisements f o r time d ep os its t h a t pay more than one fixed r a t e over the term
of th e account.
At the same time, the Board published f o r public comment a proposal to
amend i t s Regulation Q - - I n t e r e s t on D e p o s i t s - - t h a t would incor por ate the substance
of the policy statement int o the r e g u l a t i o n .
The policy statement provides t h a t advertisements for time de p os its t h a t
pay more than one fi xed i n t e r e s t r a t e should s e t
f o r t h , in equal s i z e t ype , each
r a t e of i n t e r e s t to be paid t o g e t h e r with the length
and the average e f f e c t i v e annual y i e l d for
of time each r a t e will
t h e e n t i r e term of the account.
be paid
F u rt h e r,
advertisements f o r de p o s i ts to be used in connection with Individual Retirement
Accounts (IRAs) should not r e f e r to such accounts as being t a x - f r e e or tax-exempt.
The Board's action was taken in response t o r ece nt advertisements where
an i n i t i a l high r a t e of i n t e r e s t appears in lar ge p r i n t while a lower r a t e to be
paid f o r th e predominant p a r t of th e account appears in much smaller ty p e .
The
Board expressed concern t h a t such advertisements are p o t e n t i a l l y misleading and
confusing t o d e p o s i t o r s .
The Board a n t i c i p a t e s t h a t the Federal Deposit Insurance
Corporation, th e Federal Home Loan Bank Board, and t h e Comptroller of t h e Currency
wi l l iss ue s i m i l a r policy statements in the near f u t u r e .
The Board also requested comment on a l t e r n a t i v e s to the policy st a te m e n t,
and ot he r a d v e r t i s i n g and d i s c lo s u r e is s u e s t h a t may warrant co n s i d er at i o n under
Regulation Q.
The Board requested comment by May 22,
1984.
The Board's policy statement and i t s no t i c e of proposed amendments to
Regulation Q are at t a c h e d .
-
Attachment
0
-
-
5
-
FEDERAL RESERVE
SYSTEM
REGULATION Q
[12 C.F.R.
Part
217]
I N T E R E S T ON D E P O S I T S
[Docket No.
R-0513]
A d v e r t i s i n g of M u l t i p l e Rate A c co un ts
AGENCY:
B o a r d of G o v e r n o r s of the Federal R e s er ve System.
ACTION:
P o l i c y statement.
SUMMARY:
The Boa rd
concerning
time
de p o s i t s
smal ler
that
r e ma in in g
a
period
lower
term
consumers.
in
of
the
size
in order
that
time
to
This
consumers
to
wil l
be
r e ga rd ed
time
that
is
st ate
ef fe c t i v e
can
in
for
the
misleading
as
to
rates
in type
m i s l ea di ng ,
and
of the av er ag e e f f e c t i v e annu al
for de po si ts
accounts
ac ti o n was
o f f e r e d on time deposits.
be
for
then
R e t i r e m e n t Ac co un ts
such
ma ke
and
for
Retirement
rate
sh o u l d st ate both
to be
institutions provide meaningful
assi st
initial
mo n t h s
sta te me nt
pr ac t i c e s
In di vid ual
an
advertisements
Ind iv id ua l
contributions
"tax-exem pt. "
not
a policy
advertisements
d e p os it
statement
In add iti on,
c o n n e c t i o n w it h
to
few
Such a d v e r t i s e m e n t s
include a c o n s p i c u o u s
yield.
type
a
rate
for
that
large
of
issued
advertising
i n v e s t m e nt s
be l i e v e s
st ate
a
misleading
as
Bo ar d
for
type
equa l
u se d
The
effective
of
potentially
de p o s i t s
Accounts.
of G o v e r n o r s has
taken
as
to
as su re
of
used
sh o u l d not
"tax-free"
and ac c u r a t e
comparisons
to be
that
refer
or
depository
information
interest
in
rates
and to
be i n g
E F F E C T I V E DATE:
FOR
FU R T H E R
Associate
Senior
Mar ch
22,
1984.
IN FO R M A T I O N
Gen er al
Cou ns el
CONTACT:
Counsel
Gil bert
(202-452-3625),
(202-452-3281),
Legal
issued
the
INFORMATION:
fo ll ow in g po li c y
for time dep os it s
accounts
The
to
be
that have split,
used
as
S.
Pilecki,
Board
Reserve
of
D.C.
20551.
Boar d
has
co n c e r n i n g ad ve rt i s e m e n t s
fixed
in ve stm ent s
Paul
Wa sh ing ton ,
Fe deral
stateme nt
or
Schwartz,
Division,
Gov e r n o r s of the Federal R e s e r ve System,
SUPPLEMENTARY
T.
for
interes t
rates and
Indivi dua l
for
Re t i r e m e n t
Accounts.
A D V E R T I S I N G OF M U L T I P L E RATE TIME D E PO SI TS AND
INDIVIDUAL RETIREMENT ACCOUNTS
(a)
The
fol low ing
or a c c ou nt s to be used as
i nv es tm ent s
Ac c ou nt s
to
(IRAs)
financ ia l
has
institution
st a t u t o r y
authority
other accounts.
15
come
pe r c e n t
in
the
reg ul at e
s t a n d a r d size,
to
type,
three
the
to
re m a i n i n g
three
example,
the
two or
type.
10.5
ac c o u n t
higher
is
the
or
11
rate
sta te d
interest rate.
to be
percent.
in b ol d
for
wi t h
for
federal
spe ci fi c
de po sit s
smaller,
state
that
three mo nt hs
or
perhaps,
us ua ll y
the
rate
hence or
of the term of the account.
term of the account,
years,
in
the a d v e r t i s e m e n t s
three m o n t h s
the
d i s p la y a rate of,
paid only through a fixed date two or
the first
of
advertising
inch
pr a c t i c e
Individual Re ti re m e n t
ag en cie s
The a d v e r t i s e m e n t s
two
for
a t te nt io n
r e g u la t o r y
to
ad ve r t i s i n g
whic h
paid
will
ty pi c a l l y will
be
in some
cases,
type
a size
of
mu ch
the
maturity
similar
to
for
For
be
lower,
is
two
for
of
the
dep osi ts
-
(b)
misleading
The Board
and
Regulation Q
bank
on
are
(12
-
believes
in
C FR
7
that
violation
such
of
§§ 217.6(g)),
se ct io n
w hi ch
shall not make any a d v e r t i s e m e n t
de p o s i ts
that
mi s r e p r e s e n t s
display
that
of
will
is
its
a
dep os it
rate
apply
for
the
is c o n f u s i n g
deposit
contract.
e f f e ct iv e
from the
ad v i s e d
i n f o rm at io n
yield
the
me mb e r
of
banks
that
the
m i s l e ad in g,
1f 2-411.1
st ates
a v e ra ge
and
it
an
b e c au se
the
r e g ard s
annual
effective
paid
that
than
the
the
the
te rm
the
any
rate
of
do
of
not
annu al
in str ume nt
an nual
misrepresentative
membe r
regard,
(The staf f of the Board
that
a
or
ad v e r t i s e m e n t s
of
of
rate
the
and m i s r e p r e s e n t a t i v e of the
such
life
of
are
inte res t
In this
part
to c o n s u m er s
rates stated.
time de posit
excess
over
to
larger type
predominant
Moreover,
that
mi s l e a d i n g
contracts.
to d e po si t o r s
217.6(g)
st ate s
rel ated
or
in s u b s t a n t i a l l y
acc ount
meaningful
in ac cur ate
advertisements
ave rag e
will
has
differ
previously
advertisement
of
simpl e
y ie ld
their
as
give
for
a
int ere st
in
inaccurate,
de po si t
contracts.
Federal Re s e r v e R e g u l a t o r y S e r v i c e .)
(c)(1)
than
one
each
rate
Advertisements
rate
to
advertisement
st a te me nt
ispaid
as
effective.
would
be paid
on
not
the
for
be
This
ad v an ce
what
the
acc ou nt
will
be
the
length
a p p li es
rates
and
b)
of
a c c ou nt
for
to a c c o u n t s
the
in itial
as
is st at ed
which
wh ere
a)
thr oug hou t
rate
to be
w he re
more
misleading
together with
time
to be p aid
de po sit s
rega rde d
in type of equal size
to
time
in
the
the
a co nsp icu ous
each
it
if
is
rate
known
life
p ai d
of
is
in
the
is higher
-
than
subsequent
rates.
incl ud e a c o n s p i c u o u s
yield
for
in
8
-
ad dition,
st a t e m e n t
the d e p o s i t w h i c h
of
such
advertisements
the av er ag e
a s su me s
must
eff ec ti ve annual
compounding
of
interes t
at
least annually.
(2)
rate that
For
conspicuous
such
su bj ect
is d e t e r m i n e d by an
m ay be ad ve rtised;
a
ac c o u n t s
however,
statement
rate applies ,
be d e t e r m i n e d
for
and
index,
to
a
the
va ri ab le
initial
the ad ve r t i s e m e n t
as
to
(ii)
(i)
the
time
interest
must
also
period
for
the me t h o d by w hi ch
future pe r i o ds
and
the
interest
rate
include
which
the rates
time pe ri o d
for
will
wh ich
such rates will apply.
(3)
For
acc oun ts
to be fo l l o w e d by a v a r i a b l e
the
rem ain der
determining
of
the
the
ter m
variable
that
an
initial
fixed
rate
rate d e t e r m i n e d by an index during
of
rate
same size as the fixed rate.
wh i c h the initial
offer
the
account,
shall
be
the
st at ed
in addition,
in
the
fixed rate and s ub se qu en t
me th od
type
of
of
the
time peri ods
rates
for
ap ply must be
c o n s p i c u o u s l y stated.
(d)
It
advertisements
Contributions
fe deral
to
to,
income
Ac co rd in gl y,
"tax-free"
or
refer
and
taxes
such
to
is
al so
an
IRA
e a r n in gs
rather
as
on,
than
advertisements
"ta x-exempt,"
misleading
a
IRAS
or other
ta x - f r e e
are
exemp t
should
and
not
in ac cur ate
investment.
de f e r r e d
from
use
from
taxes.
the
similar
language.
By order of the Board of Govern ors ,
Ma rch 22,
terms
1984.
(signed) William W. Wiles
W i l l i a m W. Wi le s
S e c r e t a r y of the Board
for
-
9
-
F E D E R A L R E S E R V E SY STE M
REGULATION Q
[12 C.F.R.
Part
217]
I N T E R E S T ON D E P O S I T S
[Docket No.
R-0514]
A d v e r t i s i n g of Int ere st on Deposits
AGENCY:
B o ar d of G o v e r n o r s of the Federal Rese rve System.
ACTION:
P r o p o s e d rulemaking.
SUMMARY:
The
on De p o s i t s
Board
is
proposing
to i n c o r p o r a t e
its
a d v e r t i s i n g of s p li t
Retirement
A c c ou nt
advertising
intere st
on
methods
rate
othe r
time
of
and
the
to
removal
The Bo ard
disclosure
views,
ar g u m e n t s
or
parties
B o ar d of
Street
Constitution
comments
5:15
8:45 a.m.
p.m.
may
be
are
concerning
Secretary,
and
and
cl ar if y
of
is also
22,
pe rm i s s i b l e
federal
that
1984,
Individual
deposit
req ue st in g
issues
G o v er no rs
of
Av enue,
delivered
m a y be
and 5:15 p.m.,
except
the Bo ar d' s R u le s
in vi ted
the
Co mm en ts
§ 2 6 1 . 6 ( a ) ).
of Marc h
dep osi ts
C o m m e n t s must be r e c e i v e d by May 22,
I n t e re st ed
and
R e g u l a t i o n Q — Interest
may
comments
wa rr ant
under R e g u l a t i o n Q.
ADDRESS:
such
view
and
rate
deposits
limitations.
advertising
consideration
DATES:
in
amend
Po li c y Sta tem ent
co n c e r n i n g
("IRA")
to
N.W.,
to
Federal
ro o m
Re ser ve
B-2223
in
pr ov id ed
R e g a r d i n g A v a i l a b i l i t y of
written
to W i l l i a m W.
W a s h in gto n,
i n s p ec ted
as
to submit
pro pos al
the
1984.
Wiles,
System,
D.C.
between
room
data,
20th
20551,
8:45
B-1122
a.m.
betw een
in se c t i o n 261.6(a)
Inf or ma ti on
or
of
(12 C.F.R.
10
-
FOR
FURTHER
General
IN FO R M A T I O N
Counsel
-
CONTACT:
(202/452-3625);
Section
Boutilier,
Attorney
(202/452-2418),
and
INFORMATION:
rules
sa vings
co d i f i e d
in
Interest
on
re g u la ti on
interest
the
d e p os it s
In s t i tu ti on s
Federal
at
The
ce il in gs
12
in
resulting
Deregulation
D e p o s i t o r y I ns ti tu ti on s
is
Act
banks.
Board
warranted
Board
R e s er ve
The
C.F.R.
System,
of
under
§ 371b)
interest
on
to
time
reg ul at io n
§ 2 17 .6 — A d v e r t i s i n g
view
that
of
from
Deregulation
U.S.C.
cu rr ent
believes
Committee
au t h o r i z e d
(12
ad ve r t i s e m e n t
by mem be r
Deposits.
rate
the
R e se rve
the
Regulation Q
be
The
Federal
g o v e rn in g
may
of
Counsel
20551.
19 (j ) of
pr e s c r i b e
A s so ci at e
Senior
Board of G o v e r n o rs
SUPPLEMENTARY
Schwartz,
Pilecki,
Legal
D.C.
T.
S.
or
Wa s h i ng to n,
M.
Paul
(202/452-3281);
Division,
Ela in e
Gi lb ert
the
actions
("DIDC")
Act of
re vi sio ns
of
the
this
of
Dep os it or y
p u r su an t
1980
of
to
deregulation
is
(Title
to
the
II of
Pub.
L. 96-221).
The DIDC has
interest
rate
deregulated
in
has
to a
accounts,
accounts.
re ce iv in g
ce il in gs
that
envir on me nt ,
f r ee do m
led
s u b s t a n t i a l l y de re g u l a t e d
structuring
vast
making
depository
time
diversity
it
more
Cons eq ue nt ly ,
meaningful
previously
and
in
terms
the
issue
in fo r m a t i o n
in
acc ou nt s has b e c o m e mo r e important.
of
In
have
deposits.
and
for
li mi tat ion s
existed.
in sti tut ion s
savings
difficult
the
c o n d it io ns
the
cons ume r
wh et her
This
this
greater
fre edom
on
deposit
to
com pare
cu st o m e r s
advertisements
for
on
are
deposit
-
In
re co g n i t i o n
advertis in g,
St a te me nt
on
March
concerning
pa rt icular,
the
of
22,
the
the
Federal
will
Home
the
type
an
mont hs
Board
Loan
and
effective
to
for
equal
type
that
sta te
Such
in
order
not
should
and
to
not
ass ur e
that
Board
March
22,
as
amendment
an
com me nt s
to
for
to
and
proposals
in
pr ac t i c e s
for
a
to
be
ass is t
provide s
in
of
that
can
a
to
few
will
rates
mi sl ead ing .
used
large
be
be mi s l e a d i n g
bo th
in
In
ac co un ts
This
p r o vi de
co ns ume rs
in
con ne ct io n
such
terms.
i n s t it ut io ns
Deposit
pe ri od
rate
that
Currency,
st ate
state
as
the
Sta te me nt
a lower
sho ul d
of
that
for
si milar
to
Po lic y
accounts,
Federal
Po li cy
contributions
ac ti on
as
was
mea ni ng fu l
to
make
interest rates bein g offered.
that
C.F.R.
the
be
pri nc ip le s
i n c o r p o ra te d
§ 217.6.
on the p r o p o s e d amend me nt ,
alternative
the
rega rde d
or other
p r o po se s
12
the
de p o s i t s
1984 P o l i c y Statem en t
to
and
type
be
a
of
The Bo ard a n t i c i p a t e s
e f fe c t i v e
depository
i n f o rm at io n
c o m p a r i s o n s of d e p os it
The
rate
term of the deposit
refer
"tax-exempt"
accurate
is
advertisements
with
taken
split
advertisements
in sma ll er
advertisements
"tax-free,"
a d o pt ed
advertising
IRAs.
Board,
that
addition,
IRAs
for
the r e m ai ni ng
consumers.
of
misleading
In summary,
rate
then
Board
advertising
Bank
be li e v e s
initial
the
i mp or ta nc e
be take n by the C om pt ro ll er
Insurance Corporation.
that
in cr eas ed
1984,
potentially
act io ns
-
this
de pos it s used as inves tm en ts
similar
11
that w o u l d
The
and also
a c h ie ve
set
forth
in
its
into Re g u l a t i o n Q,
Boar d
is
req ues tin g
is i nt er es te d
the goals
of
the
in any
Policy
-
S t a t em en t.
other
In
advertising
deregulation
provisions
remo va l
of
disclosure
of
of
and
-
B o ard
of
rate
Regulation Q
rate
ceilings,
should
inaccurate,
misleading,
(12
§ 217.6(g)).
C.F.R.
that
elements
Regulation Q
relating
specific
issues
be
ceilings.
the m a t e r i a l
m a t te r,
re qu est s
disclosure
a framew or k of de p o s i t
solicitations
re qu ir e
the
interest
in t e r e s t
establishes
g e ne ra l
addition,
12
to
or
a r i si ng
and
Currently,
types
of depo sit
paid
any
on
provisions
of
from
to
the
e x i st in g
ref lect
the
the
re gu lat ion
a d v e r t i s i n g rules ai med at
misrepresentative
Oth er
re ga rdi ng
w h e th er
modified
p ro hi bi ts
in te res t
com me nt s
full
instruments.
As
advertisements
or
de po si ts
of
of
inf or ma ti on
that
depo sit
the
are
con tra cts
reg ul at io n
appear
a
in
advert i s e m e n t s :
(a)
interest rates m ust be st ate d in terms of the
ann ua l
rate
of
si mpl e
interest,
and
a d v e r t i s e m e n t s that d i s p l a y an e f f e c t i v e annual
y i e l d b a s e d on c o m p o u n d i n g must state the annual
rate of s i m p l e i n te res t and the basis
of
c o m p o u n d i n g (12 C.F.R. § 217.6(a) and (b));
(b)
no intere st rate can be a d v e r t i s e d that states a
yi e l d b a s e d on a p e r i o d of m o r e than one year in
order to e n s u r e that e f f e c t i v e yie ld s are not
a r t i f i c i a l l y i n f l a t e d (12 C.F.R. § 217.6(c));
(c)
if an a d v e r t i s e d rate is pa ya bl e onl y on a
d e p os it that m e e t s a s p e c i f ic time or amount
re qu ir em en t, such r e q u ir e m e n t s must be stated
c l e a r l y and c o n s p i c u o u s l y (12 C.F.R. § 217.6(d));
(d)
a d v e r t i s e m e n t s for time de po si ts must state that
inte re st p e n a l t i e s a p p l y in the event of ea rly
w i t h d r a w a l (12 C.F.R. § 217.6(e));
(e)
me mb e r bank s are r e q u i r e d to inform cu st o m e r s at
the time that an ac c o u n t is op en ed as to the
m e t h o d that w i l l be used in c o m p u t i n g and pay in g
interes t on the account, in cl ud in g a ny p r ov is io n
for n o n p a y m e n t of int er es t (12 C.F.R. S 217.148).
-
The
Fe deral
De p o s it
Fe deral Home Loan Bank
advertising
and
individu al s.
on
ch a n g e s
is
Boa rd hav e
cou ld
to re flect
deposi ts .
Such com me nt s
method
of
average
simple
the
advertising
requiring
that
rates
effective
made
to
re moval
could,
floating
for
or
yield
may
example,
rules
for
harm ful
in comments
cei lin gs
di sc uss
in
on
the proper
interest
than
to
a dv er ti si ng
rate
stat ed
rather
be
ex i s t i n g
interest
be
the
on exi sti ng
i nt er es te d
v a ri ab le
d e po si ts
annual
is
the
for
identical
co mm ent s
that
of
and
jur isdictions.
rec ei vi ng
the B o ard
be
provisions
vi rt u a l l y
practices
In addition,
Corporation
re s p e c ti ve
in t e r e st ed
disclosure
that
-
In su ran ce
i n s t i t u t i o n s su b j e c t to their
The B o ar d
13
rates,
terms
req ui ri ng
of
or
the
that
the
rate be used.
R e g u l a t o r y F l e x i b i l i t y An a l y s i s
The
seg.)
re qu ire s
proposal
v ie w
Regulatory
on small
that
r ep or ti ng
p ro p o s a l
the
the
or
is
Flexibility
Board
to
request
in this
wo u l d
r e co r d k e e p i n g
to
conside r
entities.
p r o p o sa l
not
Statement.
co mm ent
S u gg es te d
wh en c o m me nt s are analyzed.
to
co m m e r c i a l
System.
It
is
banks
not
whic h
(5
the
on
impose
any
it
is
an y
that
of
the
the
pu rp os e
will
et
this
Board's
add it io na l
to the Boa rd' s
me mb er s
§ 601
of
alternatives
The pr o p o s e d
anticipated
impact
The
al t e r n a t i v e s
are
U.S.C.
regard,
r e qu ire men ts.
pu bl i c b e l i e v e s ma y be p r e f e r a b l e
P ol i c y
Act
of
that
this
the
March 22,
be
1984
con si de re d
rule wo uld ap ply only
the
Federal
pro po sa l
will
Re se rv e
have
a
14
-
n e g a t i v e impact on
to a t t r a c t
-
the a b i l i t y of small
deposits,
and
the
pr op osa l
depository
sho ul d
in sti tut ion s
be ne fi t
co ns ume rs
in their eff or ts to obt ai n the mos t f a vo ra bl e de po si t terms.
List of Su b j e c t s in 12 C.F.R.
Adv er t i s i n g ,
Part 217
Banks,
banking;
Fed eral
Re se rv e
System;
Fo r e i g n banking.
Pu r s u a n t
Fe de ra l
amend
Reserve
section
re v i s i n g
to
Act
authority
(12
217.6
of
paragraph
subparagraph
its
S 371b)
Regulation Q
(a),
(g)(1)
U.S.C.
under
and
and
by
se ct io n 1 9 ( j ) of
the
(12
Bo ar d
C.F.R.
r e d e s i gn at in g
adding
a
ne w
the
pro po se s
to
Part 217)
pa ra g r a p h
su b p a r a g r a p h
by
(g)
(g)(2)
as
as
follows:
§ 217.6 —
A D V E R T I S I N G OF IN TE RES T O N DE PO SI TS
*
(a)
*
*
*
Rate of i n t e r e s t .
(1)
interest
the an nua l rate of simple
ad v e r t i s e d
*
that
is
in
rates
shall
interest.
excess
of
be
st ate d
in
terms
In no c as e shall
the
rate
be i n g
of
a rate be
pai d
on
the
deposit.
(2)(i)
mo re
than one rate
the ac co un t
statement
as
in
is paid m ust
type
to
Advertisements
of
the
equal
length
e f f e c t i v e a nd a c o n s p i c u o u s
an nu al
yield
for
the
inter es t at least annually.
time
which
for
of
d e p os it s
wh er e
rate
to be
with
a co ns pi cuo us
together
s t at em en t
deposit
time
state each
size
of
for
wh i c h
each
the a v e ra ge
ass ume s
paid
rate
on
is
e f fe ct iv e
compounding
of
This ap pl ies to a c c o u n t s wh ere
15
-
(A)
be paid
th ro ug ho ut
-
it is known
in ad va nce what
the
rates
to
the life of the account will be and,
(B)
the
initial
rate
For
ac cou nts
to be
paid
is
higher
than s u b s e q u e n t rates.
(ii)
intere st
rate
that
interest
rate
may
must
also
include
is
be
d e t e rm i n e d
by
advertised;
a c o n s p ic uo us
rate
pe r i o d
will
be
determined
to be
during
future
For
acc oun ts
followed by a va r i a bl e
the remainder
determining
the
as
(B)
va ri abl e
the
initial
ad ve rt is em en t
to
(A)
the
time
the me th od by which
pe ri ods
and
that offer
rate
an
the
the va r i a b l e
rate
shall
be
initial
de t e r m i n e d
of the term of the account,
same size as the fixed rate.
w h ic h
for
a
index,
st at eme nt
and
to
time
for which such rate will apply.
(iii)
rate
an
however,
p e r i o d for whi ch such rate applies,
the
sub ject
stated
In addition,
an
index
the me th od
in
the
the initial fixed rate and su b s e q ue nt
by
fixed
type
of
the
time per iods
rates
of
for
apply must be
c o n s p i c u o u s l y stated.
*
(g)
*
*
advertisements
as
language)
*
A c c u r a c y of a d v e r t i s i n g .
(2)
("IRA")
*
a
to
It
refer
"tax-free,"
investment.
an
is
In dividual
"tax
exempt"
C o n t r i b u t i on s
to,
(1)
* * *
misleading
Retirement
and
in ac cur ate
Account
(or
other
similar
and
ear ni ng s
on,
IRAs
for
-
16
-
are deferred from federal income taxes rather than exempt from
taxes.
*
By order
*
*
*
*
of the Board of Governors
of the
Federal
Reserve System, March 22, 1984.
(signed) William W. Wiles
William W. Wiles
Secretary of the Board
@FedFRASER