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F E D E R A L R E S E R V E B A N K O F D A LLAS
Station K, Dallas, Texas 7 5 2 2 2

Circular No. 84-11
January 24, 1984

TO:

All member banks and others concerned in the Eleventh
Federal Reserve District

ATTENTION:

Chief Executive Officer

SUBJECT:

Technical amendments to Regulation Q —
Deposits

SUMMARY:

The Board of Governors of the Federal Reserve System
has amended its Regulation Q to conform the regulation
to recent actions of the Depository Institutions
Deregulation Committee. The DIDC's actions previously
were conveyed to you in Circular No. 83-142 dated
November 28, 1983.

ATTACHMENTS:

Board's press release and material as
publication in the Federal Register

Interest on

submitted

MORE INFORMATION:

Legal Department, Extension 6171

ADDITIONAL COPIES:

Public Affairs Department, Extension 6289

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.

for

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

FEDERA^RESERV^pres^^lease
* ” ? *4 L K L *? ••••••

For immediate release

December 20, 1983

The Federal Reserve Board has revised its Regulation Q -- Interest
on Deposits —

to conform the regulation to recent actions of the Depository

Institutions Deregulation Committee (DIDC).
The modifications to Regulation t|, effective January 1, 1984, deal
witn actions of the L)IDC at its June 3U and September 30 meetings, concerning
the removal (effective December 1, 1983) of the $2,500 minimum denomination on
money market deposit accounts, "Super NOW" accounts, and 7 to 31 day accounts
for IRA and Keogh depositors.

The revision also phases out these minimums for

other depositors effective January 1, 1985 and January 1, 1986.

The modifica­

tions remove the differential between the interest rate ceiling on passbook
savings accounts and 7 to 31 day deposits under $2,500 at both thrifts and
commercial banks, effective January 1, 1984, making the ceiling for all such
accounts 5 1/2 percent.
The Board's official notice of its action, giving details of these
changes, may be obtained from the Federal Reserve Banks.

FEDERAL RESERVE SYSTEM
REGULATION Q
[12 C.F.R. Part 217]
(Docket No. R - 0 4 9 7 )
INTEREST ON DEPOSITS
Technical Amendments

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Technical amendments.

SUMMARY:
The Board has amended 12 CFR Part 217 (Regulation Q
—
Interest on Deposits) to incorporate rules of the Depository
Institutions Deregulation Committee ("DIDC"), adopted pursuant
to the Depository Institutions Deregulation Act of 1980
(Title II of Pub. L. 96-221).
The amendments to Regulation Q
are technical in nature and conform the Board's rules to those
of the DIDC.
EFFECTIVE DATES:
January 1, 1984.
Other conforming amendments
are effective January 1, 1985, and January 1, 1986.
See
Supplementary Information below.
FOR FURTHER INFORMATION CONTACT:
Gilbert T. Schwartz,
Associate General Counsel (202/452-3625), Paul S. Pilecki,
Senior Counsel (202/452-3281), or John Harry Jorgenson, Senior
Attorney (202/452-3778), Legal Division, Board of Governors of
the Federal Reserve System, Washington, D.C., 20551.
SUPPLEMENTARY
INFORMATION:
The
Depository
Institutions
Deregulation Act of 1980 (Title II of Pub. L. 96-221) transfers
to the DIDC the authority conferred by section 19 (j ) of the
Federal Reserve Act (12 U.S.C. § 371b) upon the Board (and
similar authority of the Federal Deposit Insurance Corporation
and the Federal Home Loan Bank Board which are contained in
other statutes) to establish rules concerning the payment of
interest on deposit accounts.
The Board has amended its
Regulation Q to bring it into conformity with actions taken by

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the DIDC at its meetings of June 30, 1983 (48 FR 38455
(August 24, 1983)) and September 30, 1983 (48 FR 50065
(October 31, 1983)).
The following table presents the
regulatory provisions that have been affected by the DIDC's
actions.
DIDC Rule

Regulatory Provision Amended

1204.103— Penalty for Early
withdrawals

2 1 7 . 4 (d)(1)(i i i ) , (d)(6)

1204.108— Maximum Rates of
Interest Payable by
Depository Institutions on
Deposits Subject to Negotiable
Orders of Withdrawal

217.7(c)

1204.121— Seven to 31-day Time
Deposits

2 1 7.1(h),
217.7(b),(e)

1204.122— Money Market
Deposit Account

217.7(g)

1204.124— Maximum Rate of
Interest Payable on Savings
Deposits and Time Deposits
of Less Than $2,500 with
Maturities of Seven to 31 Days

2 1 7.7(b), (c)

Because of the technical nature of the amendments
conforming Regulation Q to actions of the DIDC, the Board finds
that application of the notice and public participation
provisions of 5 U.S.C. S 553 to these actions is unnecessary
and contrary to the public interest and that good cause exists
for making these actions effective on the dates indicated.
List of Subjects in 12 CFR Part 217
Advertising;
Foreign banking.

Federal

Banks,

banking;

Federal

Reserve

System;

Pursuant to its authority under section 19 of the
Reserve Act (12 U.S.C. §§ 461, 371a, and 371b), the

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Board amends 12 CFR Part 217, effective on the dates indicated,
as follows:
1.

Effective January 1, 1984:

section 217.4 is amended by removing paragraphs
(d)(1)(i i i )(D) and (E) and in paragraph (d)(6) by removing
"subparagraphs (l)(iii)(E) and" and inserting "paragraph" in
its place; and
section 217.7 is amended by revising paragraphs (b),
(c)(1), (c)(2), and (c)(2)(ii)(A); revising paragraph (e)(1);
and revising paragraph (g)(1) as follows:

SECTION 217.7— SUPPLEMENT:
MAXIMUM RATES OF INTEREST
PAYABLE BY MEMBER BANKS ON TIME AND SAVINGS DEPOSITS
*

*

*

*

*

(b)
Time deposits of less than $2,500 with original
maturities
or
required notice periods
prior
to
withdrawal of seven to 31 d a y s . Except as provided in
paragraphs (d) and (e), no member bank shall pay
interest on any time deposit of less than $2,500 with an
original maturity or required notice period prior to
withdrawal of 31 days or less at a rate in excess of
5-1/2 percent.
(c)
Savings d e p o s i t s .
(1) Except as provided in
paragraph (g), no member bank shall pay interest at a
rate in excess of 5-1/2 percent on any savings deposit.
(2) A member bank may pay interest on any deposit or
account subject to negotiable or transferable orders of
withdrawal that is authorized pursuant to 12 U.S.C.
1832(a) or a deposit or account described in section
217.5(c) (2) —
(i)

*

*

*

(ii) (A) at any rate agreed to by the depositor on any
deposit or account subject to negotiable or transferable
orders of withdrawal that is authorized pursuant to
12 U.S.C. 1832(a) subject to the conditions of this
paragraph (c)(2) with an initial balance and an average
deposit balance (as computed in paragraph (c)(2)(ii)(B)

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of this section) of no less than $2,500.
However, for
an account with an average balance of less than $2,500,
a member bank shall not pay interest in excess of the
rate specified in paragraph (c)(2)(i) of this section
for the entire computation period, as described in
paragraph (c)(2)(ii)(B). Further, a member bank may pay
interest at any rate agreed to by the depositor on an
account
issued
under
this
paragraph
(c)(2)(ii),
regardless of amount, if that account consists of funds
deposited to the credit of, or in which the entire
beneficial interest is held by, an individual pursuant
to an Individual Retirement Account agreement or Keogh
(H.R. 10) Plan established pursuant to 26 U.S.C. (I.R.C.
1954) 219, 401, 408 and related provisions.
*

*

*

*

*

(e)
Seven- to 31-day time d e p o s i t s .
(l)(i) Notwith­
standing paragraph (d), a member bank may pay interest
at any rate as agreed to by the depositor on any time
deposit with a maturity or required notice period of not
less than seven days nor more than 31 day s—
(A) in an amount of $2,500 or more; or
(B) notwithstanding paragraph (b), if such funds are
deposited to the credit of, or in which the entire
beneficial interest in such funds is held by, an
individual pursuant to an Individual Retirement Account
agreement or Keogh (H.R. 10) Plan established pursuant
to 26 U.S.C. (I.R.C. 1954) 219, 401, 408 and related
provisions.
(ii)
However,
except
as
provided
in paragraph
(e)(1)(i )(B), a member bank shall not pay interest in
excess of the ceiling rate for regular savings deposits
or accounts specified in paragraph (c)(1) of this
section on any day the balance in a time deposit issued
under this paragraph is less than $2,500.
*

*

*

*

*

(g)
Money market deposit a cc o u n t s . (l)(i) Notwith­
standing paragraph (c), a member bank may pay interest
at any rate on a deposit account as described in this
paragraph—
(A) with an initial balance of no less than $2,500 and

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an average deposit balance (as computed in paragraph
(g)(2)) of no less than $2,500; or
(B) that consists of funds deposited to the credit of,
or in which the entire beneficial interest is held by,
an individual pursuant to an Individual Retirement
Account agreement or Keogh (H.R. 10) Plan established
pursuant to 26 U.S.C. (I.R.C. 1954) 219, 401, 408 and
related provisions.
(ii)
However,
except
as provided
in paragraph
(g)(1)(i )(B ) , for an account with an average balance of
less than $2,500, a member bank shall not pay interest
in excess of the ceiling rate specified for NOW accounts
under paragraph (c)(2)(i) of this section for the entire
computation period, as described in paragraph (g)(2) of
this section.
*
*
*
*
*

2.
Effective
January
1,
1985,
sections
2 1 7 . 1 ( h ) (1)(iii) (B) and 217.7 are amended by removing "$2,500"
wherever it appears and inserting "$1,000" in its place.
3.

Effective January 1, 1986:

section 2 1 7 . 1 (h)(1)(iii ) is amended by removing "(A)",
inserting a period after the phrase "seven days", and removing
"or" and paragraph (B); and
section 217.7 is amended by:
removing the text of
paragraph (b) and inserting "[Reserved]" in its place; by
removing paragraph (g)(8); and by revising paragraphs (c)(2),
(e)(1), and (g)(1) to read as follows:
SECTION 217.7— SUPPLEMENT:
MAXIMUM RATES OF INTEREST
PAYABLE BY MEMBER BANKS ON TIME AND SAVINGS DEPOSITS
*
(c)

*

Savings d e p o s i t s .

(2) A member
account—

bank

may

*

*

(1)
pay

(i) described in section
exceed 5-1/4 percent; or

*

*
*

*

interest on

any deposit

or

217.5(c)(2) at a rate not to
(ii) subject to negotiable or

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transferable orders of withdrawal that is authorized
pursuant to 12 U.S.C. 1832(a) at any rate agreed to by
the depositor.
*

*

*

*

*

(e)
Seven- to 31-day time d e p o s i t s . (1) Notwith­
standing paragraph (d), a member bank may pay interest
at any rate as agreed to by the depositor on any time
deposit with a maturity or required notice period prior
to maturity of not less than seven days nor more than 31
days.
*

*

*

*

*

(g)
Money market deposit a c c o u n t s .
(1) Notwithstanding
paragraph (c), a member bank may pay interest at any
rate on a deposit account as described in this paragraph.
*

*

*

*

*

By order of the Board of Governors, December 19, 1983.

(signed) William W. Wiles

William W. Wiles
Secretary of the Board