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FEDERAL RESERVE BANK OF NEW YORK !* CircutarNo. 7881 May 2 6.1976 Procedural Modification of Transitional Reserve-Requirement Relief for New or Merged Member Banks 7o /l// :n fAc OfAerj Concerned. D^fncf. In Novem ber 1975 the Board of Governors of the Federal Reserve System adopted a policy providing transitional relief from the increase in reserve requirem ents resulting from a b ank joining the Federal Reserve System or from a m erger of a nonm em ber or m em ber bank into an existing m em ber bank. The policy, announced in our Circular No. 7755 dated November 21, 1975, was designed to allow these banks to assum e gradually the requirem ents for m aintaining additional reserves. The relief is in the form of waiver of penalties th at would otherwise be imposed for a certain portion of deficiencies in reserves m aintained by these banks, on a declining scale over a two-year period. Section 204.3 of Regulation D, "Reserves of M em ber B anks," provides for the carry-over of an excess or deficiency in reserve balances to the next reserve com putation period to the extent th a t such excess or deficiency does not exceed two percent of required reserves. U nder procedures adopted when the transitional relief policy went into effect, none of the unused portion of a transitional waiver could be carried over to the next com putation period. However, beginning with the reserve m aintenance week ended May 19, 1976, such procedures have been m odified in order to extend the carry-over privileges to m em ber banks th a t are eligible for transitional waivers. U nder the new procedures, the full am ount of the transitional waiver to which a m em ber bank is entitled will be added to the b an k 's m aintained balances. Any resulting excess or deficiency will be carried forward to the next com putation period to the extent provided in section 204.3 of R egulation D. Q uestions regarding this m atter may be directed to Thom as Cam pbell (Tel. No. 212-791-5249) or Nancy Rivera (Tel. No. 212-791-5994) of our A ccounting D epartm ent. A dditional copies of this circular will be furnished upon request. PAUL A. V O LCK ER, PrasM/enf.
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