The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK OF DALLAS Dallas, Texas, Decem ber 15, 1934 REDU CTION OF M AXIM U M IN TE R E ST R A T E P A Y A B L E B Y M EM BER BAN K S ON TIM E A N D SAY IN G S DEPOSITS To the Member Bank Addressed: The Federal R eserve Board, at W ashington, has adopted, effective February 1, 1935, the follow ing amendments to Regulation “ Q” governing the payment o f interest by m em ber banks on time and sav ings deposits. Subsection (c) o f Section III is amended to read as follow s: “ (c) Maximum Rate o f Interest.— (1 ) No m em ber bank shall pay interest, accruing after January 31,1935, on any time de posit or any part th ereof at a rate in excess of 2 V2 per cent per annum, compounded quar terly, regardless o f the basis upon which such interest m ay be computed, except as otherwise provided in this subsection. (2) A m em ber bank m ay pay interest on time deposits in accordance w ith the term s o f any certificate o f deposit or other contract which was lawfully entered into in good faith prior to Decem ber 18, 1934, and in force on that date and which m ay not legally be terminated or modified by such bank at its option or without liability; but no such certificate o f deposit or other contract shall be renewed or extended unless it be modified to conform to the provisions o f this regulation, and every m em ber bank shall take such action as m ay be necessary, as soon as possible consistently with its contractual obligations, to bring all such certificates o f deposit or other contracts into con form ity w ith the provisions o f this regulation. (3) The rate o f interest paid by a m em ber bank upon a time deposit shall not in any case exceed (I) the m aximum rate prescribed in paragraph 1 o f this subsection, or ( //) the m axi mum rate authorized by law to be paid upon such deposits by State_ banks or trust companies organized under the laws o f the State in which such member bank is located, w hichever m ay be less. (4) A m em ber bank m ay pay interest on a time deposit received during the first five days o f any calendar month at the m aximum rate prescribed in paragraph 1 o f this subsection calculated from the first day o f such calendar m onth until such deposit is withdrawn or ceases to constitute a time deposit under the provisions o f this regulation, w hichever shall first occur. (5) A m em ber bank m ay pay interest on a tim e deposit which is payable only at an office o f such bank located outside o f the States o f the United States and o f the district o f Co lumbia at a rate not exceeding the m aximum rate prescribed in paragraph 1 o f this subsection or such higher m aximum rate as m ay be prescribed by the Federal Reserve Board from time to time fo r paym ent in the locality in which such office is located.” This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Subsection (c) o f Section V is amended to read as follow s: “ (c) M aximum Rate o f Interest.— (1) No m em ber bank shall pay interest, accruing a fter January 31, 1935, on any savings deposit or any part thereof at a rate in excess o f 2 1/ 2 per cent per annum, compounded quar terly, regardless o f the basis upon which such interest m ay be com puted except as otherwise provided in this subsection. (2) A m em ber bank m ay pay interest on savings deposits in accordance with the term s o f any contract, which was law fully entered into in good faith prior to D ecem ber 18, 1934, and in force on that date and which m ay not legally beterminated or modified by such bank at its option or w ithout liability; but no such contract shall be renewed or extended unless it be modified to con form to the provisions o f this regulation, and every m em ber bank shall take such action as shall be necessary, as soon as possible consistently with its contractual obliga tions, to bring all such contracts into conform ity w ith the provisions o f this regulation. (3) The rate o f interest paid by a member bank upon a savings deposit shall not in any case exceed ( / ) the m axim um rate prescribed in paragraph 1 o f this subsection or (II) the m axim um rate authorized by law to be paid upon such deposits by State banks or trust com panies organized under the laws o f the State in which such m em ber bank is located, w hich ever m ay be less. (4) A m em ber bank m ay pay interest on a savings deposit received during the first five days o f any calendar m onth at the m aximum rate prescribed in paragraph 1 o f this subsection calculated from the first day o f such calendar month until such deposit is withdrawn or ceases to constitute a savings deposit under the provisions o f this regulation, whichever shall first occur. (5) A m em ber bank m ay pay interest on a savings deposit which is payable only at an o f fice o f such bank located outside o f the States o f the United States and o f the D istrict o f Columbia at a rate not exceeding the maximum rate prescribed in paragraph 1 o f this subsec tion or such higher m axim um rate as m ay be prescribed by the Federal Reserve Board from tim e to time fo r paym ent in the locality in which such office is located.” Footnote 6 o f Regulation “ Q” is amended to read as fo llo w s: “ This lim itation is not to be interpreted as preventing the compounding o f interest at other than quarterly intervals provided that the aggregate amount o f such interest so compounded does not exceed the aggregate am ount o f interest at the rate above prescribed when com pounded quarterly.” Footnote 9 o f Regulation “ Q” is amended to read as fo llo w s: “ This lim itation is not to be interpreted as preventing the compounding o f interest at other than quarterly intervals provided that the aggregate amount o f such interest is compounded does not exceed the aggregate am ount o f interest at the rate a b o v e p r e s c r i b e d when com pounded quarterly.” It will be noted that the reduction o f the maximum rate o f interest payable by m em ber banks on tim e and savings deposits (w ith the exception noted above in regard to contracts made prior to Decem ber 18, 1934) will becom e effective on February 1, 1935. In the event you are now paying interest on tim e or savings deposits at a rate in excess o f 2 1 / 2 % per annum you m ay wish to n otify your custom ers (especially savings depositors) prom ptly o f the reduced rate which will becom e effective on February 1, 1935. A revised edition o f Regulation “ Q” is now being printed fo r d i s t r i b u t i o n , amended as outlined above, and a copy will be sent you as soon as practicable. Y ours very truly, Chairman o f the Board
@FedFRASER