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federal R eserve Ba nk o f Dallas DALLAS, TE X A S 75222 Circular No. 72-256 November 8 , 1972 To All Member Banks and Others Concerned in the Eleventh Federal Reserve District: Enclosed is a reprint of Regulation Q, of the Board of Governors of the Federal Reserve System as amended effective January 1, 1971. This replaces your copies of the regulation, as amended effective February 12, 1970, and the amendments thereto, effective June 30, 1970 and January 1, 1971 (which is the latest amendment to the regulation). Please retain your copy of the supplement, effective June 2 k , 1970, to Regulation Q. Yours very truly, P. E. Coldwell, President Enclosure This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM INTEREST ON DEPOSITS REGULATION Q (12 C F R 217) As amended effective January 1, 1971 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve District in which the inquiry arises. CONTENTS Page Page Sec . 2 1 7 .0 — Scope of Pa r t ....................................... 3 Se c . 2 1 7 .4 — P a y m e n t B efore Sec . 2 1 7 .1 — D ............................................. 3 (a) D em and deposits ................................... 3 e fin it io n s (b) Time d e p o s i t s .......................................... 3 (c) Time certificates of d e p o s i t ................ 3 4 (f) Deposits as including certain promissory notes .............................. 4 of T im e D epo s it s ...................................................... 6 (a) Time deposits payable on a specified d a t e ........................................................ 6 (b ) Time deposits payable after a specified period .................................................... 6 (d) Time deposits, open a c c o u n t .............. 3 (e) Savings deposits ..................................... M a t u r it y (c) Time deposits payable after a specified notice .................................................... 6 (d ) Paym ent in emergencies ..................... 6 (e) Loans upon security of time deposits 6 (g) Multiple m aturity time d e p o s i t ......... 4 Se c . 2 1 7 .2 — D emand D e p o s i t s ............................... 5 S e c . 2 1 7 .5 — W ithdraw al of S a v in g s D e po s it s 6 (a) Requirements regarding notice of withdrawal .......................................... 6 (a) Interest prohibited ................................. 5 (b) Meaning of i n t e r e s t ............................... 5 (b ) Loans on security of savings deposits 7 Se c . 217.3— I nterest S a v in g s D e po s it s on T im e and ......................................................... (c) M anner of paym ent of savings deposits 7 5 (a) M axim um rate ........................................ 5 (b ) Modification of contracts to conform to r e g u la tio n ........................................ 5 (c) M ember banks limited to maxim um rate for State banks ....................... 5 S e c . 2 1 7 .6 — A d v er t isin g D e po s it s of In t e r e st on ............................................................................ 7 (a) Annual rate of simple i n t e r e s t .............. 7 (b) Percentage yields based on one year 7 (d ) G race periods in computing interest on savings deposits .......................... 5 (c) Percentage yields based on periods in excess of one year .......................... 8 (e) C om putation o f i n t e r e s t ........................ 5 (d ) Time or am ount requirements ......... (f) N o interest after m aturity or ex piration of notice ............................ 5 (e) P r o f i t ........................................................... 8 (g) Time deposits of foreign governmental entities and international organiza tions ...................................................... 5 (g) Solicitation of deposits for banks [S e c . 217.7 — S u p p l e m e n t , M S a v in g s D e p o s it s , a x im u m R is p r i n t e d s e p a r a t e l y . ] ates of 8 (f) A ccuracy of advertising ..................... Statutory A pp e n d ix In t e r e st P ayable by M 8 . 8 ...................................................... em ber B anks on T im e 9 and REGULATION Q (12 C F R 217) As a m en ded effective J a n u a ry 1, 1971 INTEREST ON DEPOSITS* SEC T IO N 217.0— SCO PE O F P A R T (a) This [Part] is issued under authority of provisions of section 19 of the Federal Reserve A ct which, together w ith related provisions of law, are cited in the [Appendix], (b ) This P art relates to the paym ent of de posits and interest thereon by m em ber banks of the Federal Reserve System and not to the com putation and m aintenance of the reserves which m em ber banks are required to m aintain against deposits. T he rules concerning reserves of m em ber banks are contained in P art 204 of this chapter. (c) T he provisions of this P art do not apply to any deposit which is payable only at an office of a m em ber bank located outside of the States of the U nited States and the D istrict of Columbia. SEC T IO N 217.1— D E F IN IT IO N S (a) Demand deposits. T he term “any deposit which is payable on dem and”, hereinafter referred to as a “dem and deposit”, includes every deposit which is not a “time deposit” or “savings deposit” , as defined in this section. (b) Time deposits. T he term “time deposits” means “time certificates of deposit” and “time deposits, open account”, as defined in this section. (c) Time certificatesof deposit. T he term “time certificate of deposit” m eans a deposit evidenced by a negotiable or non-negotiable instrum ent which provides on its face that the am ount of such deposit is payable to bearer or to any speci fied person or to his order: (1) On a certain date, specified in the instru ment, not less than 30 days after date of the deposit, or (2) A t the expiration of a certain specified time not less th an 30 days after the date of the instrum ent, or (3) U pon notice in writing which is actually required to be given not less than 30 days before the date of repaym ent,1 and (4) In all cases only upon presentation and surrender of the instrument. (d) Time deposits, open account. T he term “time deposit, open account” m eans a deposit, other than a “time certificate of deposit”, with respect to which there is in force a written con tract with the depositor that neither the whole nor any p art of such deposit m ay be withdrawn, by check or otherwise, prior to the date of m atu rity, which shall be not less than 30 days after the date of the deposit,2 or prior to the expira * The text corresponds to the C ode of F ederal R egula tions, Title 12, C h a p te r II, P a rt 217; cited as 12 C F R 217. The words “this P a r t” , as used herein, m ean Regulation Q. 1 A deposit with respect to which the b a n k merely re serves the right to require notice o f n o t less th a n 30 days before any w ithdraw al is m ade is n o t a “time certificate of deposit” within the m eaning of the above definition. 2 Deposits, such as C hristm as club accounts an d vacation club accounts, which are m ade u nder w ritten contracts providing th a t no w ithdraw al shall be m ade until a certain n u m ber of periodic deposits have been m ade during a period of no t less th a n 3 m onth s constitute “ time deposits, open acco u n t” , even th ough som e o f the deposits are m ade within 30 days fro m the end of the period. § 217.1 tion of the period of notice which m ust be given by the depositor in writing not less th an 30 days in advance o f w ithdraw al.3 (e) Savings deposits. The term “savings deposit” means a deposit— (1) which consists of funds deposited to the credit of one or m ore individuals, o r of a corpo ration, association, or other organization operated primarily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes and not operated for profit;4 or in which the entire beneficial interest is held by one o r more individuals or by such a corporation, association, o r other organization; and (2) with respect to which the depositor is not required by the deposit contract but may at any time be required by the bank to give notice in writing of an intended withdrawal not less than 30 days before such withdrawal is m ade 5 and which is n ot payable on a specified date or at the expiration of a specified time after the date of deposit. (f) Deposits as including certain promissory notes and other obligations. F o r the purposes of this Part, the term “deposits” also includes a m em ber ban k ’s liability on any promissory note, acknowledgm ent of advance, due bill, or similar obligation (written or oral) that is issued or under taken by a m em ber bank principally as a means of obtaining funds to be used in its banking business, except any such obligation that: (1) is issued to (or undertaken with respect to) and held fo r the account of (i) a bank or an institution the time deposits of which are exempt from § 217.7 pursuant to § 217.3(g) or (ii) an agency of the U nited States or the G overnm ent Development Bank for Puerto Rico; (2) evidences an indebtedness arising from a transfer of direct obligations of, or obligations 3 A deposit with respect to which the b a n k merely re serves the right to require notice o f not less th an 30 days before any withdraw al is m ade is not a “time deposit, open acco u n t”, within the m eaning of the above definition. 4 Deposits in joint accounts of two o r m ore individuals m ay be classified as savings deposits if they m eet the other requirem ents of the above definition, b u t deposits of a partnership op erated for profit m ay n o t be so classified. D eposits to the credit of an individual of funds in which any beneficial interest is held by a corporation, p artn er ship, association, or other organization operated for profit o r not operated prim arily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes may not be classified as savings deposits. '•> T he exercise by the b an k of its right to require such notice shall not cause the deposit to cease to be a savings deposit. REGULATION Q that are fully guaranteed as to principal and interest by, the U nited States or any agency thereof that the bank is obligated to repurchase; (3 ) (i) bears on its face, in bold-face type, the following: “This obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation”; states expressly that it is subordinated to the claims of depositors and ineligible as collateral for a loan by the issuing bank; is unsecured; has an original m aturity of 7 years or more; is in an am ount of at least $500; and has been approved by the Com ptroller of the Currency, in the case of a national bank, or by the Board of Governors, in the case of a State m em ber bank, as an addition to the b ank ’s capital structure; or (ii) meets all of the requirem ents in the preceding clause except m aturity and with respect to which the C om p troller, in the case of a national bank, or the Board, in the case of a State m em ber bank, has determined that exigent circumstances require the issuance of such obligation without regard to the provisions of this P art; or (iii) was issued or publicly offered before June 30, 1970, with an original m aturity of m ore than 2 years; or (4) arises from a borrowing by a m em ber bank from a dealer in securities, for one business day, of proceeds of a transfer of deposit credit in a Federal Reserve Bank (or other immediately avail able funds), commonly referred to as “Federal funds”, received by such dealer on the date of the loan in connection with clearance of securi ties transactions. This paragraph shall not, however, affect (i) any instrum ent issued before June 27, 1966, or (ii) any instrum ent that evidences an indebted ness arising from a transfer of assets under re purchase agreement issued before July 25, 1969. (g) Multiple maturity time deposit. The term “multiple m aturity time deposit” means any time deposit (1) that is payable at the depositor’s option on m ore than one date, w hether on a specified date or at the expiration of a specified time after the date of deposit (e.g., a deposit payable at the option of the depositor either three m onths or six months after the date of deposit), (2) that is payable after written notice of withdrawal, or (3) with respect to which the underlying instru m ent or contract or any inform al understanding or agreement provides for autom atic renewal at maturity. REGULATION Q SEC T IO N 217.2— D E M A N D D EPO SITS (a) Interest prohibited. Except as provided by section 19 of the Federal Reserve Act, no m em ber bank of the Federal Reserve System shall, directly or indirectly, by any device whatsoever, pay any interest on any dem and deposit. (b) Meaning of interest. W ithin this Part, any paym ent to or for the account of any depositor as com pensation for the use of funds constituting a deposit shall be considered interest. S EC T IO N 217.3— IN T E R E S T O N T IM E A N D S A V IN G S D EPO SITS (a) Maximum rate. Except as provided in this section, no m em ber bank shall, directly or in directly, by any device whatsoever, pay interest on any time or savings deposit at a rate in excess of such applicable m axim um rate as the Board of G overnors of the Federal Reserve System shall prescribe from time to time in § 217.7. In as certaining the rate of interest paid, the effects of com pounding of interest may be disregarded. (b) Modification of contracts to conform to regulation. N o certificate of deposit or other con tract shall be renewed or extended unless it be modified to conform to the provisions of this Part, and every m em ber bank shall take such action as may be necessary, as soon as possible con sistently with its contractual obligations, to bring all of its outstanding certificates of deposit or other contracts into conform ity with the provi sions of this Part. (c) Member banks limited to maximum rate for State banks. T he rate of interest paid by a member bank upon a time deposit or savings deposit shall not in any case exceed (1) the applicable m axi m um rate prescribed pursuant to the provisions of paragraph (a) of this section, or (2) the appli cable m axim um rate authorized by law to be paid upon such deposits by State banks or trust com panies organized under the laws of the State in which such m em ber bank is located, whichever m ay be less. (d) Grace periods in computing interest on sav ings deposits. A m em ber bank may pay interest on a savings deposit received during the first 10 calendar days of any calendar m onth at the applicable m axim um rate prescribed pursuant to paragraph (a) of this section calculated from the first day of such calendar m onth until such de posit is w ithdraw n or ceases to constitute a savings § § 2 1 7 .2 - 2 1 7 .3 deposit under the provisions of this Part, which ever shall first occur; and a m em ber bank may pay interest on a savings deposit w ithdraw n dur ing its last 3 business days of any calendar m onth ending a regular quarterly or semiannual interest period at the applicable m axim um rate prescribed pursuant to paragraph (a) of this section cal culated to the end of such calendar month. (e) Computation of interest. In the com putation of simple daily interest, the time factor should be expressed as a fraction in which the actual num ber of days the funds earn interest is the num erator, and the denom inator is either 360, 365, or, in a leap year, 366. However, when a deposit matures in one m onth (or multiples thereof), the bank may use 30 days in the num erator (or corresponding multiples thereof). (f) No interest after maturity or expiration of notice. A fter the date of m aturity of any time deposit, such deposit is a dem and deposit, and no interest may be paid on such deposit fo r any period subsequent to such date. A fter the expira tion of the period of notice given with respect to the repaym ent of any time deposit or savings deposit, such deposit is a dem and deposit and no interest m ay be paid on such deposit for any period subsequent to the expiration of such notice, except that, if the ow ner of such deposit advise the bank in writing that the deposit will not be withdrawn pursuant to such notice or that the deposit will thereafter again be subject to the contract or requirem ents applicable to such de posit, the deposit will again constitute a time deposit or savings deposit, as the case may be, after the date upon which such advice is received by the bank. (g) Time deposits of foreign governmental en tities and international organizations. Section 217.7 does not apply to the rate of interest that may be paid by a m em ber bank on a time deposit having a m aturity of 2 years or less and representing funds deposited and owned by (1) a foreign n a tional government, or an agency or instrum en tality th e re o f 5a engaged principally in activities which are ordinarily perform ed in the United States by governmental entities, (2) an interna tional entity of which the U nited States is a member, or (3) any other foreign, international, sa O ther th a n States, provinces, m unicipalities or other regional or local governm ental units, or agencies or instrum entalities thereof. § § 217.3-217.4-217.5 or supranational entity specifically designated by the Board as exempt from § 217.7. All certificates of deposit issued by m em ber banks to such enti ties on which the contract rate of interest exceeds the m axim um prescribed under § 217.7 shall pro vide that (1) in the event of transfer, the date of transfer, attested to in writing by the transferor, shall appear on the certificate, and (2) the m axi m um rate limitations of § 217.7 in effect at the date of issuance of the certificate shall apply to the certificate for any period during which it is held by a person other th an an entity exempt therefrom under the foregoing sentence.0 Upon the presentm ent of such a certificate for payment, the bank may pay the holder the contract rate of interest on the deposit for the time that the certificate was actually owned by an entity so exempt. SEC T IO N 217.4— P A Y M E N T O F T IM E D E PO SIT S B E F O R E M A T U R IT Y (a) Time deposits payable on a specified date. N o m em ber bank shall pay any time deposit, which is payable on a specified date, before such specified date, except as provided in paragraph (d) of this section. (b) Time deposits payable after a specified period. N o m em ber bank shall pay any time deposit, w hich is payable at the expiration of a certain specified period, before such specified period has expired, except as provided in para graph (d) of this section. (c) Time deposits payable after a specified notice. N o m em ber bank shall pay any time deposit, with respect to which notice is required to be given a certain specified period before any withdrawal is made, until such required notice has been given and the specified period thereafter has expired, except as provided in paragraph (d) of this section. (d) Payment in emergencies. In an emergency where it is necessary to prevent great hardship 8 A new certificate n o t m aturing prior to the m aturity date of the original certificate m ay be issued by the m em ber b a n k to the transferee, in which event the original m ust be retained by the bank. T he new certificate m ay no t provide for interest after the date of transfer at a rate in excess of the applicable m axim um rate authorized by § 217.7 as of the date o f issuance of the original certificate. REGULATION Q to the depositor, a m em ber bank m ay pay before maturity a time deposit or the portion thereof necessary to meet such emergency: P r o v i d e d , T hat before making such paym ent the depositor shall sign an application describing fully the cir cumstances constituting the emergency which is deemed to justify the paym ent of the deposit before maturity, which application shall be ap proved by an officer of the bank who shall certify that, to the best of his knowledge and belief, the statements in the application are true. Such appli cation shall be retained in the b an k ’s files and m ade available to the examiners authorized to examine the bank. W here a time deposit is paid before m aturity the depositor shall forfeit accrued and unpaid interest for a period of not less than 3 m onths on the am ount withdraw n if an am ount equal to the am ount w ithdraw n has been on deposit 3 m onths or longer, and shall forfeit all accrued and unpaid interest on the am ount with draw n if an am ount equal to the am ount with drawn has been on deposit less than 3 months. W hen a portion of a time certificate of deposit is paid before maturity, the certificate shall be canceled and a new certificate shall be issued for the unpaid portion of the deposit with the same terms, rate, date, and m aturity as the original deposit. (e) Loans upon security of time deposits. A m em ber bank may m ake a loan to the depositor upon the security of his time deposit provided that the rate of interest on such loan shall be not less than 2 per cent per annum in excess of the rate of interest on the time deposit. S EC T IO N 217.5— W IT H D R A W A L O F SA V IN G S D EPO SITS (a) Requirements regarding notice of with drawal. W hether or not interest is paid, no m em ber shall require or waive notice of withdrawal as to any am ount or percentage of the savings deposit of any depositor unless it shall similarly require or waive such notice as to the same am ount or percentage of the savings deposits of every other depositor which are subject to the same contractual provisions with respect to notice of withdrawal. If a m em ber bank, w ithout requir ing notice of withdrawal, pays interest that has REGULATION Q § 2 1 7 .5 - 2 1 7 .6 accrued on a savings deposit during the preceding interest period, it shall, upon request and without requiring such notice, pay interest that has ac crued during said period on the savings deposits of every other depositor. N o m em ber bank shall change its practice with respect to the requiring or waiving of notice of withdrawal of savings deposits for the purpose of discriminating in favor of or against any depositor or depositors, and no such change of practice shall be made except pursuant to duly recorded action of the bank’s board of directors or a properly authorized com mittee thereof. (b) Loans on security of savings deposits. If it is not the practice of a m em ber bank to require notice of withdrawal of savings deposits, no restrictions are imposed by this P art upon loans by such bank to its depositors upon the security of such deposits. If it is the practice of a member bank to require notice of withdrawal of a savings deposit, such b ank may make loans to a depositor upon the security of such deposit, but the rate of interest on such loans shall be not less than 2 per cent per annum in excess of the rate of interest paid on such deposit. (c) Manner of payment of savings deposits. (1) Subject to the provisions of subparagraph (2) of this paragraph, a m em ber bank m ay perm it withdrawals to be m ade from a savings deposit only through p ay m e n t7 to the depositor himself (but not to any other person whether or not acting for the depositor), except (i) where the deposit is represented by a pass book, to any person presenting the passbook; 7 (ii) to an executor, adm inistrator, trustee, or other fiduciary holding the savings deposit as part of a fiduciary estate, or to a person, other than the bank, holding a general pow er of attorney granted by the depositor; (iii) to any person, including the bank, that has extended credit to the depositor on the secu rity of the savings deposit, where such paym ent is made in order to enable the creditor to realize upon such security; (iv) pursuant to the order of a court of com petent jurisdiction; (v) upon the death of the depositor, to any person authorized by law to receive the deposit; or (vi) interest paid to a third person pursuant to written instruction or assignment by the depositor accepted by the bank, and placed on file therein. (2) N otw ithstanding the provisions of subpara graph (1) of this paragraph, no withdrawal shall be perm itted by a m em ber bank to be m ade from a savings deposit, through paym ent to the bank itself or through transfer of credit to a dem and or other deposit account of the same depositor (other than of interest on the savings deposit) if such paym ent or transfer is made pursuant to any advertised plan or any agreement, w ritten or oral, (i) which authorizes such paym ents or transfers of credit to be m ade as a norm al practice in order to cover checks or drafts draw n by the depositor upon the bank; or (ii) which provides that such paym ents or trans fer of credit shall be m ade at daily, monthly, or other such periodic intervals, except where made to enable the bank, on the depositor’s behalf and pursuant to his written instructions, to effect the paym ent of instalments of principal, interest, or other charges (including taxes or insurance pre miums) due on a real estate loan or mortgage. (3) W here a savings deposit is evidenced by a passbook, every withdrawal made upon presen tation of the passbook shall be entered in the pass book at the time of withdrawal, and every other withdrawal from such a deposit shall be entered in the passbook as soon as practicable after the withdrawal is made. 7 P aym en t fro m a savings deposit or presentation of a passbook m ay be m ad e over the counter, thro ugh the mails, o r otherwise. (b) Percentage yields based on one year. W here a percentage yield achieved by com pounding in S EC T IO N 217.6— A D V E R T IS IN G O F IN T E R E S T O N D EPO SITS Every advertisement, announcem ent, or solici tation relating to the interest paid on deposits in m em ber banks shall be governed by the following rules: (a) Annual rate of simple interest. Interest rates shall be stated in term s of the annual rate of simple interest. In no case shall a rate be adver tised that is in excess of the applicable m aximum rate for the particular deposit. § 2 1 7 .6 terest during one year is advertised, the annual rate of simple interest shall be stated with equal prominence, together with a reference to the basis of com pounding. N o m em ber bank shall advertise a percentage yield based on the effect of grace periods permitted in § 217.3(d). (c) Percentage yields based on periods in excess of one year. N o advertisement shall include any indication of a total percentage yield, com pounded or simple, based on a period in excess of a year, or an average annual percentage yield achieved by com pounding during a period in excess of a year. (d) Time or amount requirements. If an adver tised rate is payable only on deposits that m eet time or am ount requirem ents, such requirem ents shall be clearly and conspicuously stated. W here the time requirem ent for an advertised rate is in excess of a year, the required num ber of years for the rate to apply shall be stated with equal prominence, together with an indication of any lower rate or rates th at will apply if the deposit is w ithdraw n at an earlier maturity. REGULATION Q (e) Profit. T he term “profit” shall not be used in referring to interest paid on deposits. (f) Accuracy of advertising. N o m em ber bank shall m ake any advertisement, announcem ent, or solicitation relating to the interest paid on de posits that is inaccurate or misleading or that misrepresents its deposit contracts. (g) Solicitation of deposits for banks. Any per son or organization that solicits deposits for a m em ber bank shall be bound by the rules con tained in this section with respect to any adver tisement, announcem ent, or solicitation relating to such deposits. N o such person or organization shall advertise a percentage yield on any deposit it solicits for a m em ber bank that is not author ized to be paid and advertised by such bank. (SECTIO N 217.7— M A X IM U M R A TES O F IN T E R E S T P A Y A B L E BY M E M B E R BANKS ON T IM E A N D SA V IN G S D EPO SITS, is printed separately.) STATUTORY APPENDIX REGULATION Q STATUTORY APPENDIX Section 19 of the Federal Reserve A ct provides in part as follows: (a) T he Board is authorized for the purposes of this section to define the term s used in this section, to determine w hat shall be deemed a paym ent of interest, to determ ine w hat types of obligations, w hether issued directly by a m em ber bank or indirectly by an affiliate of a m em ber bank or by other means, shall be deemed a deposit, and to prescribe such regulations as it may deem necessary to effectuate the purposes of this section and to prevent evasions thereof. [U.S.C., title 12, sec. 461.] *** (i) N o m em ber bank shall, directly or indirectly, by any device whatsoever, pay any interest on any deposit which is payable on dem and: P r o v i d e d , T h at nothing herein contained shall be construed as prohibiting the paym ent of interest in accord ance with the terms of any certificate of deposit or other contract entered into in good faith which is in force on the date on which the bank becomes subject to the provisions of this paragraph; but no such certificate of deposit or other contract shall be renewed or extended unless it shall be modified to conform to this paragraph, and every m em ber bank shall take such action as may be necessary to conform to this paragraph as soon as possible consistently with its contractual obli gations: P r o v i d e d f u r t h e r , T hat this paragraph shall not apply to any deposit o f such bank which is payable only at an office thereof located outside of the States of the U nited States and the District of Colum bia: P r o v i d e d f u r t h e r , T h at until the expiration of two years after the date of enact m ent of the Banking A ct of 1935 this paragraph shall not apply (1 ) to any deposit m ade by a savings bank as defined in section 12B of this Act, as amended, o r by a m utual savings bank, or (2 ) to any deposit of public funds m ade by or on behalf of any State, county, school district, or other subdivision or municipality, or to any deposit of trust funds if the paym ent o f interest with respect to such deposit of public funds or of trust funds is required by State law. So much of existing law as requires the paym ent of interest with respect to any funds deposited by the U nited States, by any Territory, District, or possession thereof (including the Philippine Islands), or by any public instrum entality, agency, or officer of the foregoing, as is inconsistent with the provi sions of this section as amended, is hereby re pealed. [U.S.C., title 12, sec. 371a.] (j) T he Board may from time to time, after consulting with the Board of D irectors of the F ederal Deposit Insurance C orporation and the Federal H om e Loan Bank Board, prescribe rules governing the paym ent and advertisement of in terest on deposits, including limitations on the rates of interest which may be paid by m em ber banks on time and savings deposits. T he Board may prescribe different rate limitations for dif ferent classes of deposits, for deposits of different am ounts or with different maturities or subject to different conditions regarding withdraw al or repayment, according to the nature or location of m em ber banks or their depositors, or accord ing to such other reasonable bases as the Board m ay deem desirable in the public interest. No m em ber bank shall pay any time deposit before its m aturity except upon such conditions and in accordance with such rules and regulations as may be prescribed by the said Board, or waive any requirem ent of notice before paym ent of any savings deposit except as to all savings de posits having the same requirem ent: P r o v i d e d , T hat the provisions of this paragraph shall not apply to any deposit which is payable only at an office of a m em ber bank located outside of the States of the United States and the District of Columbia. D uring the period com mencing on O ctober 15, 1962, and ending on October 15, 1968, the provisions of this paragraph shall not apply to the rate of interest which m ay be paid by m em ber banks on time deposits of foreign governments, m onetary and financial authorities of foreign governments when acting as such, or international financial institutions of which the U nited States is a member. [U.S.C., title 12, sec. 371b. The first two sentences of this paragraph are, in part, temporary. Unless section 7 of the Act of September 21, 1966 (80 Stat. 825), as amended by the Act of December 23, 1969 (83 Stat. 371), is modified, on June 1, 1973, such sentences will read as follows: “The Board of Governors of the Federal Reserve System shall from time to time prescribe rules governing the payment and advertisement of interest on deposits, including limitations on the rate of interest which may be paid by member banks on time and savings deposits, and shall prescribe different rates for such paymejit on time and savings deposits having different maturi ties, or subject to different conditions respecting withdrawal or repayment, or subject to different conditions by reason of different locations, or according to the varying discount rates of member banks in the several Federal Reserve districts.”] STATUTORY APPENDIX REGULATION Q Section 24 of the F ederal Reserve A ct p ro vides, with respect to national banking associa tions, in part as follows: * * * Any such association may continue hereafter as heretofore to receive time and sav ings deposits and to pay interest on the same, but the rate of interest which such association may 10 pay upon such time deposits or upon savings or other deposits shall not exceed the maxim um rate authorized by law to be paid upon such deposits by State banks or trust com panies organ ized under the laws of the State in w hich such association is located. [U.S.C., title 12, sec. 371.]
@FedFRASER