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F ederal

reserve

Bank

DALLAS. TEXAS

of

Dallas

75222
C ircular No. 77-90
August 19, 1977

REGULATION Q— INTEREST ON DEPOSITS
T e m p o r a r y S u s p e n s io n of E a rly W ithdrawal P enalty

TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
On A u g u s t 3, 1977, the B oard of G o v e r n o r s of the F ed eral R e s e rv e
System a n n o u n c e d a te m p o r a r y s u s p e n s i o n of th e R egulation Q p e n alty for e a r ly
w ith d ra w a l of time d e p o s its for d e p o s it o r s th a t w e re victim s of th e storm s a n d
flooding b e g in n in g a b o u t J u l y 19, 1977, in the Commonwealth of P e n n s y lv a n ia .
T h is action is re tr o a c tiv e to J u l y 21, 1977, a n d will rem ain in effect until m idnig ht
J a n u a r y 31, 1978 .
To a s s i s t victims of th is d i s a s t e r , th e B oard h a s g iv e n p e rm is s io n to
m em ber b a n k s , a n d h a s e n c o u r a g e d them to p e rm it e a r l y w ith d ra w a l of time d e ­
p o s its w ith o u t p e n a lty upon a sho w in g th a t th e d e p o s ito r h a s su ffe re d a loss re la te d
to th e d i s a s t e r . T h e B o a r d 's action a p p lie s to m em ber b a n k s a n y w h e r e , in c lu ding
those in the E leventh F e d e ra l R e s e r v e D is tric t. H o w ev e r, the w a iv e r is limited to
time d e p o s it s of in d iv id u a ls o r b u s i n e s s e s th a t s u ffe re d financial loss, d u e to the
flooding, in th e s e v e n - c o u n ty a r e a of P e n n s y lv a n ia d e c l a r e d a major d i s a s t e r a re a
by P r e s i d e n t C a r t e r on J u l y 21, 1977. T h e P e n n s y lv a n ia c o u n tie s a r e : B ed fo rd ,
C am b ria , C le a r fie ld , In d ia n a , J e f f e r s o n , S o m e rs e t, a n d W estm oreland. A m em ber
b a n k s h o u ld obtain from a d e p o s ito r s e e k in g to w ith d ra w a time d e p o s it a s ig n e d
application d e s c r i b i n g fully th e d i s a s t e r - r e l a t e d loss. T h i s a p p lic atio n s h o u ld be
a p p r o v e d a n d c e rtifie d b y an o fficer of the b a n k .
T h e B o a r d 's action is in te n d e d to g iv e financial re lie f b y making time
d e p o s its immediately a v a ila b le to victims of the flood w ith o u t loss of p r e v io u s ly
e a r n e d i n te r e s t. Q ue stio n s s h o u ld b e d i r e c t e d to o u r C o n su m e r A ffairs u n it,
Ext. 6171. A copy of th e FEDERAL REGISTER notice c o n ta in in g the B o a r d 's o r d e r
is p r i n t e d on th e r e v e r s e of th is c i r c u l a r .
S in c e r e ly y o u r s ,
R o b ert H . Boykin
F i r s t Vice P r e s i d e n t

Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-8 00 -4 9 2 -4 4 0 3 (intrastate) and 1 -8 0 0 -5 2 7 -4 9 7 0 (interstate). For calls placed locally, please use 651 plus
the extention referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

E x tra c t From
FEDERAL REGISTER
VOL. 42, NO. 155,
T h u r s d a y , A u g u s t 11, 1977
p . 40775

FEDERAL RESERVE SYSTEM
[Beg. Q; Docket No. R-0108]

INTEREST ON DEPOSITS
Order Granting Temporary Suspension of
Early Withdrawal Penalty

The Board of Governors has suspended
tem porarily th e Regulation Q penalty for
th e w ithdraw al of tim e deposits prior to
m aturity from member banks (12 CFR
§ 217.4(d)) for depositors affected by the

severe storm s and flooding beginning
about July 19, 1977, in th e Common­
w ealth of Pennsylvania. O n July 21,1977,
pursuant to section 301 of th e Disaster
Relief Act of 1974 (42 U.S.C. 5 5141) and
Executive Order 11795 of July 11, 1974,
th e President designated th e following
counties of the Commonwealth of P enn­
sylvania a m ajor disaster area: Bedford,
Cambria, Clearfield, Indiana, Jefferson,
Somerset, and W estmoreland. The Board
regards the President’s action as recog­
nition by the Federal government th a t a
disaster of m ajor proportions has oc­
curred. The President’s designation en­
ables victims of th e disaster to qualify
for special emergency financial assist­
ance. The Board believes it appropriate to
provide an additional measure of assist­
ance to victims by tem porarily suspend­
ing the Regulation Q early w ithdraw al
penalty.1 The Board’s action perm its a
member bank wherever located to pay a
tim e deposit before m aturity w ithout im­
posing th is penalty upon a showing th a t
th e depositor has, in fact, suffered prop­
erty or other financial loss in the disaster
area as a result of the severe storm s and
flooding. A member bank should obtain
from a depositor seeking to withdraw a
tim e deposit pursuant to this action a
signed application describing fully the
disaster-related loss. This application
should be approved and certified by an
officer of the bank. This action will be
retroactive to July 21, 1977, and will re­
m ain in effect until 12 m idnight Ja n u ­
ary 31,1978.
Section 19(j) of th e Federal Reserve
Act (12 U.S.C. § 371b) provides th a t no
member bank shall pay any tim e deposit
before m aturity except upon such condi­
tions and in accordance w ith such rules
and regulations as may be prescribed by
th e Board. The Board has determ ined it
to be in th e overriding public interest to
suspend the penalty provision in § 217.4
(d) of R egulation Q for th e benefit of de­
positors suffering' disaster-related losses
w ithin those geographical areas of the
Commonwealth of Pennsylvania officially
designated a m ajor disaster area by the
President. The Board, in granting this
tem porary suspension, encourages mem­
ber banks to perm it penalty-free w ith­
draw al before m aturity of tim e deposits
for depositors who have suffered disas­
ter-related losses w ithin the designated
disaster area.
In view of the urgent need to provide
Immediate assistance to relieve the fi­
nancial hardship being suffered by per­
sons directly affected by the severe dam ­
age and destruction occasioned by the
flooding in th e designated counties of
Pennsylvania, th e Board finds th a t good
cause exists for dispensing w ith notice
and public participation referred to in
section 553(b) of Title 5 of th e United
1Section 217.4(d) of Regulation Q pro­
vides that where a time deposit, or any por­
tion thereof, is paid before maturity, a m e m ­
ber bank m a y pay Interest on the amount
withdrawn at a rate not to exceed that cur­
rently prescribed for a savings deposit and
that the depositor shall forfeit three months
of Interest payable at such rate.

S tates Code w ith respect to this action
and th a t public procedure w ith regard to
this action would be contrary to th e
public interest. Because of th e need to
provide assistance as soon as possible and
because the Board’s action relieves a re­
striction, th e Board finds th a t there is
good cause to make the action effective
immediately.
By order of th e Board of Governors,
effective August 3,1977.
G r i f f i t h L . Gar w oo d ,

Deputy Secretary ot the Board.
[PR Doc.77—23186 Piled 8-10-77:8:46 am]