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F ederal
reserve
Ba n k
DALLAS, TEXAS
of
Dallas
75 222
Circular No. 80-215
N ovem ber 7, 1980
TECHNICAL AMENDMENT TO REGULATION Q - INTEREST ON DEPOSITS
TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has adopted
several technical amendments to sections of Regulation Q to implement the
decision to permit member banks to pay interest on time deposits with
maturities or required notice periods of 14 days or more beginning October 30,
1980. Reference was made to the member bank ceiling rate of 5 1/4 percent
for these deposits if they are under $100,000 in our Circular No. 80-199 of
October 23, 1980.
The Federal Register notice together with the language of the
technical amendments is printed on the following pages. Questions concerning
the actions taken should be directed to the Consumer Affairs Section of our
Bank Supervision and Regulations Department, Ext. 6171.
Sincerely yours,
Robert H. Boykin
First Vice President
Banks and others are encouraged to use the following incoming WATS 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)
TITLE 12— BANKS AND BANKING
CHAPTER II— FEDERAL RESERVE SYSTEM
SUBCHAPTER A— BOARD OP GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[Regulation Q]
(Docket No. R-0306)
PART 217— INTEREST ON DEPOSITS
Definitions
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Technical amendment.
SUMMARY: The Board has adopted technical amendments to certain provisions
of its Regulation Q— Interest on Deposits (12 CFR Part 217) to permit
member banks to pay interest on time deposits with maturities or required
notice periods of 14 days or more beginning October 30, 1980. These
amendments implement actions taken by the Board announced on August 15,
1980 (45 FR 56009), reducing the minimum maturity of time deposits to
14 days and by the Depository Institutions Deregulation Committee on
September 9, 1980, which adopted a final rule (12 CFR § 1204.112), effective
October 30, 1980, establishing a ceiling rate of interest payable of
5-1/4 per cent by member banks on time deposits of under $100,000 with
original maturities or required notice periods of 14 to 90 days. This
action will enable member banks to offer time deposits with original
maturities (or required notice periods) of 14 days or more.
EFFECTIVE DATE:
October 30, 1980.
FOR FURTHER INFORMATION CONTACT: Gilbert T. Schwartz, Assistant General
Counsel (202/452-3625), or John Harry Jorgenson, Attorney (202/452-3778),
Legal Division, Board of Governors of the Federal Reserve System, Washington,
D.C., 20551.
SUPPLEMENTARY INFORMATION: On August 15, 1980, the Board announced
a revised Regulation D— Reserve Requirements of Depository Institutions
(12 CFR Part 204), implementing the reserve requirement provisions of
the Monetary Control Act of 1980 (Title I of Pub. L. No. 96-221) (45
FR 56009). At that time the Board also shortened the minimum maturity
of time deposits from 30 to 14 days for purposes of Regulations D and
Q.
(As a part of this action the Board also reduced the minimum notice
period that may be required for the withdrawal of savings deposits from
30 to 14 days.) The Board believes that a shorter minimum maturity
for time deposits would improve the competitive position of domestic
depository institutions vis-a-vis open market instruments and foreign
banking offices. Prior to this action the Board's Regulation Q (12
CFR Part 217) required at least a 30-day maturity or required notice
-2-
period for a deposit to qualify as a time deposit.
(12 CFR §§ 217.1(c)
and (d)). In addition, the definition of a savings deposit under Regulation Q
required that the deposit contract provide that the bank may require
the depositor to give not less than 30 days notice before a withdrawal
is made (12 CFR § 217.1(e)). The following technical amendment of
Regulation Q conforms it to the Board's action of August 15, 1980.
On September 9, 1980, the Depository Institutions Deregulation
Committee ("DIDC") adopted a final rule (12 CFR § 1204.112 (45 FR 68640))
establishing a ceiling rate of interest of 5-1/4 per cent payable by
member banks on time deposits of under $1 0 0 , 0 0 0 with original maturities
(or required notice periods) of 14 to 90 days. There will be no ceiling
rate for time deposits of $1 0 0 , 0 0 0 or more with minimum maturities or
notice periods of 14 days or more. Accordingly, the Board's amendment
of Regulation Q also conforms it to the action adopted by the DIDC in
establishing an interest rate ceiling on such deposits (12 CFR § 1204.112).
These amendments have been adopted to implement the Board's
action of August 15, 1980 to permit member banks to offer time deposits
with maturities of 14 days or more. Public comment was solicited on
this proposal on June 4, 1980 (45 FR 38388). The Board finds that the
deferred, of effective date provisions of 5 U.S.C. § 553(b) to this action
are unnecessary because this action relieves a regulatory restriction.
Effective October 30, 1980, pursuant to the Board's authority under
section 19 of the Federal Reserve Act (12 U.S.C. § 461 et seq.), to
define the term deposit Regulation Q (12 CFR Part 217 is amended as
follows:
1.
Sections 217.1(c)(1), (2) and (3), (d) and (e)(2); 217.5(c)(2);
217.7(b) and (h) of Regulation Q and footnotes 1, 2 and 3 (12 CFR §§ 217.1(c)(1),
(2) and (3), (d) , (e)(2); 217.5(c)(2); 217.7(b) and (h)) are amended
by striking "30" and inserting "14".
By order of the Board of Governors of the Federal Reserve
System, October 29, 1980.
(signed) Theodore E. Allison
Theodore E. Allison
Secretary of the Board
[SEAL]
