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Federal R eserve Bank
OF DALLAS
ROBERT

D. M C T E E R , J R .

p re s id e n t
A N D CH IE F E X E C U T IV E O F F IC E R

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DALLAS, TEXAS 7 5 2 2 2

Notice 91-82
TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Regulation D (Reserve Requirements
of Depository Institutions)
DETAILS

This notice is issued (1) to provide guidance to depository institu­
tions in the Eleventh District that may be offering an account arrangement to
some customers that combines a money market deposit account (MMDA) with a
demand deposit account and (2) to assure awareness of the proper treatment of
these account arrangements for reserve purposes.
The terms of the a r range­
ments and the way the depository institutions report the deposits can, in some
instances, constitute violations of the Federal Reserve B o a r d ’s Regulation D —
Reserve Requirements of Depository Institutions (12 C.F.R. Part 204).
A depository institution may allow a customer to create overdrafts
in a demand deposit account during the week and then pay off the aggregate
overdraft at the end of the week with one transfer from the MMDA.
The rate of
interest paid on the money market deposit account equals the rate of interest
charged on the overdraft line of credit, and the number of transfers from the
MMDA to cover the overdrafts would never exceed the regulatory limit of six
per month that applies to automatic, interaccount transfers.
The depository
institution may not be in compliance with Regulation D if it considers the
demand account balance as zero when it calculates its "transaction accounts"
and includes the balance in the MMDA in its "time deposits" when it files Form
FR 2900 (Report of Deposits) under Regulation D.
Under Section 204.2(e)(5) of Regulation D, a "transaction account"
includes
Deposits or accounts maintained in connection with an
arrangement that permits the depositor to obtain
credit directly or indirectly through the drawing of a
negotiable or nonnegotiable check, draft, order or
instruction or other similar device (including t e l e ­
phone or electronic order or instruction) on the
issuing institution that can be used for the purpose
of making payments or transfers to third persons or
others, or to a deposit account of the depositor.

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 Intrastale (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)

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This provision was added to Regulation D in 1982 (47 Fed. Reg. 58218 (December
30, 1982)) because arrangements involving time deposits and credit lines are
effective substitutes for transaction accounts and provide the opportunity for
avoidance of transaction account reserve requirements.
This language clearly
covers the type of account arrangement described above.
Violations of Regulation D could result
reserve deficiency charge under Section 204.7 of
civil money penalties under Section 19(1) of the
U.S.C. Section 505) or Section 18 of the Federal
U.S.C. Section 1828).

in the assessment of a
Regulation D, as well as
Federal Reserve Act (12
Deposit Insurance Act (12

MORE INFORMATION
For more information, please contact Dean Pankonien at (214)
651-6228.
For additional copies of this B a n k ’s notice, please contact the
Public Affairs Department at (214) 651-6289.
Sincerely yours,