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F e d e r a l R e s e r v e Ba n k
DALLAS. TEXAS

of

Dallas

75222
C ircu lar No. 76-90
Ju ly 2, 1976

REGULATION Q — INTEREST ON DEPOSITS
T e m p o r a r y S u s p e n s i o n of E a r l y W i th d r a w a l P e n a l ty

TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
On J u n e 25, 1976, t h e B o a r d of G o v e r n o r s o f t h e F e d e r a l R e s e r v e
S y s t e m a n n o u n c e d a s i x - m o n t h s u s p e n s i o n o f t h e R e g u l a ti o n Q p e n a l t y for e a r l y
w i t h d r a w a l of tim e d e p o s i t s fo r d e p o s i t o r s t h a t w e r e v ic tim s of t h e c o l l a p s e of
t h e T e to n Dam in I d a h o . T h i s a c t i o n is r e t r o a c t i v e to J u n e 6, 1976, a n d will
r e m a in in effec t u n til m i d n i g h t D e c e m b e r 31, 1976.
T o a s s i s t v ic tim s of t h i s d i s a s t e r , t h e B o a rd h a s g i v e n p e r m i s s i o n
to m e m b e r b a n k s , a n d h a s e n c o u r a g e d th e m to p e r m i t e a r l y w i t h d r a w a l of tim e
d e p o s i t s w i t h o u t p e n a l t y u p o n a s h o w i n g t h a t t h e d e p o s i t o r h a s s u f f e r e d a loss
r e l a t e d to t h e d i s a s t e r . T h e B o a r d ' s a c t io n a p p l i e s to m e m b e r b a n k s a n y w h e r e ,
i n c l u d i n g t h o s e in t h e E l e v e n t h F e d e r a l R e s e r v e D i s t r i c t . H o w e v e r , t h e w a i v e r
is lim ited to tim e d e p o s i t s of i n d i v i d u a l s o r b u s i n e s s e s t h a t s u f f e r e d fin a n c ia l
l o s s , d u e to t h e c o l l a p s e of t h e T e t o n Dam, in t h e f i v e - c o u n t y a r e a of Idaho
d e c l a r e d a m a jo r d i s a s t e r a r e a b y P r e s i d e n t F o r d on J u n e 6, 1976. T h e Idaho
c o u n t i e s a r e : B o n n e v i l l e , F r e m o n t , M a d is o n , J e f f e r s o n , a n d B i n g h a m . A mem­
b e r b a n k s h o u l d o b ta in from a d e p o s i t o r s e e k i n g to w i t h d r a w a tim e d e p o s i t a
s i g n e d a p p l i c a t i o n d e s c r i b i n g f u l l y th e d i s a s t e r - r e l a t e d lo s s . T h i s a p p l i c a t i o n
s h o u l d b e a p p r o v e d a n d c e r t i f i e d b y a n o f f ic e r of t h e b a n k .
T h e B o a r d ' s a c t io n is i n t e n d e d to g i v e f in a n c ia l r e l i e f b y m a k in g tim e
d e p o s i t s im m e d ia te ly a v a i l a b l e to v ic tim s of t h e flood w ith o u t lo ss of p r e v i o u s l y
e a r n e d i n t e r e s t . Q u e s tio n s s h o u l d b e d i r e c t e d to R i c h a r d W e s t, S e n i o r A t t o r n e y
of o u r R e g u l a t i o n s D e p a r t m e n t , a t (214) 651-6169. A c o p y of t h e FEDERAL
REGISTER n o tic e c o n t a i n i n g th e B o a r d ' s o r d e r is p r i n t e d on t h e follo w in g p a g e s .

S incerely y o u r s ,
T . W. Plant
F i r s t V ic e P r e s i d e n t

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

FEDERAL RESERVE SYSTEM
[12 CFR PART 217]
[REG. Q]
INTEREST ON DEPOSITS
[DOCKET No. R-0045]
Order Granting Temporary Suspension of Early Withdrawal Penalty

The Board has suspended temporarily the Regulation Q penalty
for the withdrawal of time deposits prior to maturity from member banks
(12 CFR 217.4(d)) for depositors affected by the collapse of the Teton
Dam

on

June 5,1976.On June 6, 1976, the President,pursuant

301

of the DisasterRelief

to section

Act of 1974 (42 U.S.C. 5141), designated

the following Idaho counties a major disaster area:
Fremont, Jefferson and Madison.

Bingham, Bonneville,

The Board regards the President's

action as recognition by the Federal government that a disaster of major
proportions has occurred.

The President's designation enables victims

of the disaster to qualify for special emergency financial assistance.
The Board believes it appropriate to provide an additional measure of
assistance to flood victims by temporarily suspending the Regulation Q
.
y
early withdrawal penalty.

The Board's action permits a member bank

to pay a time deposit before maturity without imposing this penalty
upon a showing that the depositor has, in fact, suffered property or

1/ Section 217.4(d) of Regulation Q provides that where a time deposit,
or any portion thereof, is p*id before maturity, a member bank may pay
interest on the amount withdrawn at a rate not to exceed that currently
prescribed for a savings deposit and that the depositor shall forfeit
three months of interest payable at such rate.

-

2 -

other financial loss in the disaster area as a result of the collapse
of the Teton Dam.

A member bank should obtain from a depositor seeking

to withdraw a time 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 June 6, 1976, and will remain in effect until 12 midnight
December 31, 1976.
Section 19( ) of the Federal Reserve Act (12 U.S.C. 371b)
j
provides that no member bank shall pay any time deposit before maturity
except upon such conditions and in accordance with such rules and regu­
lations as may be prescribed by the Board.

Pursuant to § 19( ) the
j

Board has determined it to be in the overriding public interest to
suspend the penalty provision prescribed in § 217.4(d) of Regulation Q
for the benefit of depositors suffering disaster-related losses within
those counties of the State of Idaho officially designated a major disaster
area by the President.

This action will be effective from June 6, 1976,

until 12 midnight December 31, 1976.

The Board, in granting this temporary

suspension, encourages member banks to permit penalty-free withdrawal
before maturity of time deposits for depositors who have suffered disasterrelated losses within the designated disaster area.
In view of the urgent need to provide immediate assistance
to relieve the financial hardship being suffered by persons directly
affected by the severe damage and destruction occasioned by the collapse
of the Teton Dam, the Board finds that good cause exists for dispensing

- 3 -

with notice and public participation referred to in section 553(b) of
Title 5 of the United States Code with respect to this action and that
public procedure with regard to this action would be contrary to the
public interest.

Because of the need to provide assistance as soon

as possible and because the Board's action relieves a restriction, the
Board finds that there is good cause to make the action effective
inanediately.
By order of the Board of Governors, June 25, 1976.

(Signed) Griffith L. Garwood

Griffith L. Garwood
Assistant Secretary of the Board

[SEAL]