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federa l Reserve Bank o f Dallas DALLAS, TE X A S 75222 C ircu lar N o. 8 2 -1 1 5 A u g u st 31, 1982 REGULATION D RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS Reserves on New Time Deposit Instrument TO THE FINANCIAL INSTITUTION ADDRESSED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: On Friday, August 20, the Board of Governors of the Federal Reserve System amended Regulation D to treat the 7- through 13-day segment of the new nonnegotiable 7- to 31-day deposit instrument recently authorized by the Depository Institutions Deregulation Committee (DIDC) as a time deposit for reserve requirement. The DIDC authorized Federally-insured commercial banks, mutual savings banks, and savings and loan associations to offer the new deposit instrument as of September 1, 1982. U.S. branches and agencies of foreign banks and Edge or Agreement Corporations may, in general, also offer this account. The DIDC actions were detailed in circular No. 82-97, dated August 11, 1982. The Board action is to be effective as of September 1, 1982, the day the newly-authorized account can be offered. The new instrument is a nonnegotiable time deposit with a fixed maturity or notice period of between 7 and 31 days at the option of the institution. Thrift institutions may offer a nominal rate of return equal to the most recent 91-day Treasury bill rate (auction average on a discount basis) while commercial banks will be limited to paying one-quarter percentage point less. (The interest rate ceilings and the differential will end on May 1, 1983. In addition, the differential and ceiling will be suspended whenever the 91-day Treasury bill rate has been nine percent or less for four consecutive Treasury bill auctions.) A minimum deposit balance of $20,000 is required to receive this rate; if for any reason the account falls below $20,000, the passbook rate is paid on the remaining balance. Third-party negotiable drafts drawn directly on the 7 to 31 day instrument are prohibited, as are any sweep arrangements involving this instrument. In the absence of Board action, this new deposit instrument with original maturities of 7 through 13 days would have been subject to reserve requirements as a transaction account, while the new deposit instrument with original maturities of 14 through 31 days would have been subject to reserve requirements as a time deposit. In its action on August 20, the Board amended Regulation D so that for reserve requirement purposes, the DIDC's newly authorized account issued in maturities of 7 through 13 days will be regarded as a time deposit, the same as such accounts issued in maturities of 14 through 31 days. Banks and others are encouraged to use the following incoming 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) - 2 - For depository institutions, such as credit unions, that are not subject to DIDC rules, Regulation D will regard as time deposits nonnegotiable deposits or accounts of $20,000 or more with original maturities or required notice periods of 7 to 13 days that are not otherwise classified as transaction accounts. (The Board's action does not affect the ability of Federally-insured credit unions to offer share accounts under which the credit union reserves the right to require 14 days' notice prior to withdrawal.) Of course, deposits or accounts with maturities or required notice periods of 14 days or more generally will continue to be regarded as time deposits. Thus, all of the new 7 to 31 day deposit instruments meeting the conditions of the newly-authorized account should be reported as time deposits on the FR 2900, Report of Transaction Accounts, Other Deposits, and Vault Cash—in Item 13 if personal and in Item 14a if nonpersonal. Revised instructions to the FR 2900 reflecting the reporting treatm ent of the new DIDC instrument will be issued shortly. Questions on the new instrument or on the reporting treatm ent should be directed to Stephen Welch or Karen Salisbury at (214) 651-6294 or (214) 698-4205. Additional copies of this circular will be furnished upon request to the Department of Communications, Financial and Community Affairs, Extension 6289. Sincerely yours, William H. Wallace First Vice President FEDERAL RESERVE BANK OF DALLAS Date: To: September 9, 1982 All Financial I n s t i t u t i o n s in the Eleventh Federal Reserve D i s t r i c t - From: ROBERT H. BOYKIN o-V vkcuU h ^-s For your information, attached i s a copy of our response to the Board of Governors on a proposal to improve the speed and e f f i c i e n c y of the n a t i o n ' s payments mechanism by modifying the System's check processing and c o l l e c t i o n procedures. on September 14, 1982 Mr. Ric E ld r e d , Vice P r e s id e n t A l l i e d Bank o f Texas P. 0 . Box 3326 Houston, Texas 77002 Hr. John E. S a s ia d e k , S e n io r Vice P re s id e n t Bank o f th e Southwest P. 0 . Box 2629 Houston, Texas 77001 Mr. R ichard C u ts in g e r S e n io r Vice P r e s i d e n t J C a p ita l Bank, N.A. P. 0 . Box 500 Houston, Texas 77001 Mr. Grover E l l i s Vice Chairman F i r s t C ity N ational Bank o f Houston P. 0 . Box 2557 Houston, Texas 77001 Mr. W illiam C. Lee E xecutive Vice P r e s i d e n t I n t e r F i r s t Bank Houston, N.A. P. 0 . Box 2555 Houston, Texas 77001 Mr. Steve Jo n e s,V ic e P r e s id e n t RepublicBank Houston P. 0. Box 299001 Houston, Texas 77299 Mr. E v e r e tt Gambrell S e n io r Vice P r e s i d e n t Texas Commerce Bank, N ational A ssociation P. 0 . Box 2558 Houston, Texas 77001 Mr. Fred Redeker Executive Vice P r e s i d e n t Houston C le a rin g House A sso ciatio n 717 T ra v is S t r e e t , S u i t e 600 Houston, Texas 77002 September 15, 1982 Copies o f l e t t e r t o a l l FRB P re s id e n ts September 13* 1982 Copies o f l e t t e r d a te d September 9, 1982, addressed t o th e Board o f Governors from Robert H. Boykin and a memo addressed t o All F in a n c ia l I n s t i t u t i o n s in th e E leventh Federal Reserve D i s t r i c t d ated September 9 , 1982, from Mr. Boykin s e n t to the follow ing: All o f f i c e r s a t th e Head O ffic e and Branches Mr. Barry G. Smith, P r e s id e n t Texas Independent Bank P. 0 . Box 47403 D a lla s , Texas 75247 Mr. J e r r y Denton Executive Vice P r e s i d e n t F i r s t C ity Bank o f D allas P. 0. Box 88000 D a lla s , Texas 75230 Mr. Fred Jones . Executive Vice P r e s id e n t F o rt Worth N ational Bank P. 0. Box 2050 F o rt Worth, Texas 76101 Mr. Richard H art Vice Chairman I n t e r F i r s t Bank D a lla s , N.A. P~ 0. Box 83000 D a lla s , Texas 75283 Mr. Thomas Lynch Senior Vice P r e s id e n t M ercantile National Bank P. 0 . Box 225415 D a lla s , Texas 75265 Mr. J e r r y McElhatton Executive Vice P r e s id e n t RepublicBank D allas P. 0. Box 225961 D a lla s , Texas 75265 Mr. Larry N. H ill Executive D ir e c to r North Texas C lea rin g House A sso ciatio n 700 F i d e l i t y Union L ife B uilding D a lla s , Texas 75201
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