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FEDERAL RESERVE BANK OF NEW YORK [ Circular No. 9210 ~| December 10, 1981 J DEPOSITORY INSTITUTIONS DEREGULATION COMMITTEE Rescission of Waiver of Early Withdrawal Penalties Ruling on New IRA/Keogh Accounts To all Commercial Banks, Mutual Savings Banks, and Savings and Loan Associations in the Second Federal Reserve District, and Others Concerned: As announced in our Circular No. 9196, dated November 25, 1981, the Depository Institutions Deregulation Committee (DIDC) has voted to retain the new IRA/Keogh deposit category that it adopted at its September 22 meeting, which has a minimum maturity of 1-Yz years and no regulated interest rate ceiling. The Committee also decided that it would not permit the waiver o f early withdrawal penalties for the transfer of existing IRA/Keogh accounts to the new IRA/Keogh deposit instrument. The DIDC ruling, which originally created the new IRA/Keogh deposit category, was sent to member banks in this District with our Circular No. 9177, dated October 30, 1981; copies of that ruling will be furnished upon request directed to the Circulars Division of this Bank. Printed on the reverse side is the text of the DIDC’s order rescinding its earlier ruling providing for a waiver of the mandatory penalty for early withdrawal for transfers within an institution o f an existing IRA/Keogh time deposit to the new IRA/Keogh deposit category. Questions regarding this matter may be directed to our Consumer Affairs and Bank Regulations Department (Tel. No. 212-791-5914). A nthony M . S olom on, President. (OVER) Credit Union Administration, (202) 337subject to the rules governing penalties 1090; and F. Douglas Birdzell, Counsel, for early withdrawal of time deposits. This action will not affect the other or Joseph A. DiNuzzo, Attorney, Federal 12 CFR Part 1204 Deposit Insurance Corporation, (202) provisions of the rule to be effective on December 1,1981. 389— 4324 or 389-4237. [Docket No. D-0024J The Committee requested comments SUPPLEMENTARY INFORMATION: At its New IRA/Keogh Time Deposits on options, including waiver of the meeting of September 22,1981, the mandatory penalties for early a g e n c y : Depository Institutions Committee adopted a final rule withdrawal for IRA/Keogh time Deregulation Committee. establishing a new IRA/Keogh time deposits at its meeting of December 12. deposit category to be effective on a c t io n : Rescission of final rule on 1980, and finds that further notice and December 1,1981. See Committee waiver of penalties for early Docket No. D-0024 (October 23,1981); 46 public procedure pursuant to the withdrawal. provisions of 5 U.S.C. 553 with regard to FR 53395 (October 29,1981). The new this action are unnecessary. The deposit category is to have a minimum s u m m a r y : The Depository Institutions Committee also finds that waiver of the maturity of 1% years and no regulatory Deregulation Committee (the deferred effective date provision of 5 interest-rate ceiling. Accounts “Committee") has rescinded the waiver established under the new category may U.S.C. 553 is necessary to assure of mandatory penalties for early rescission of the previous action before be structured to permit additions at an withdrawal for transfers within an its effective date. In view of the time without extending the maturity of institution of IRA/Keogh time deposits Committee’s findings, sections 603 and the funds in the account. The Committee in existence on or prior to December 1, 604 of the Regulatory Flexibility Act (5 also waived mandatory penalties for 1981, to the new IRA/Keogh time U.S.C. 603 and 604) are not applicable. early withdrawal for transfers within an deposit category established by the Furthermore, because of the nature of institution from any other IRA/Keogh Committee at its last meeting. On the this action, the Committee finds that basis of information developed since its account in existence on or prior to good cause exists under § 1201.6(e) of adoption, the Committee haa determined December 1,1981, to the new account the Committee’s regulations for making that the waiver is likely to have adverse category. On the basis of information developed the action effective less than 30 days effects (in terms of increased costs) to since its last meeting, the Committee has from the date of publication in the depository institutions. Accordingly, Federal Register. determined that waiver of the transfers within an institution of any Pursuant to its authority under section mandatory penalties for early existing time deposit to the new IRA/ 203(a) of the Depository Institutions withdrawal is likely to have adverse Keogh category will be subject to the effects on the cost to depository Deregulation Act of 1980 (Title II of Pub. rules governing penalties for early L 96-221; 12 U.S.C. 3502(a)), the institutions of the transferred accounts. withdrawal. Moreover, the effects of these increased Committee amends Part 1204, Chapter e f f e c t iv e DATE: November 20,1981. XII of Title 12, Code of Federal costs would have a greater impact on FOR FURTHER INFORMATION, CONTACT: thrift institutions, which already are Peculations as set forth below: Allan Schott, Attorney-Advisor, or experiencing severe pressure on Elaine Boutilier. Attorney-Advisor, earnings. These adverse effects Department of the Treasury, (202) 566outweigh the potential benefits to PART 1204— INTEREST ON DEPOSITS 6798 or 566-8737: Daniel L Rhoads, existing IRA/Keogh account depositors Attorney. Board of Governors of the that would result from the waiver. §1204.118 [Am ended] Federal Reserve System, (202) 452-3711; Therefore, the Committee has decided Amend § 1204.118 by removing to rescind the waiver of the mandatory Rebecca H. Laird. Senior Associate paragraph (b) and the designation “(a)" penalties for early withdrawal General Counsel, Federal Home Loan from the first paragraph. contained in the final rule on the new Bank Board. (202) 377-6446: David Ansell. Attorney. Office of the IRA/Keogh time deposit category. By order of the Committee, November 24. 1981. Comptroller of the Currency, (202) 47Accordingly, transfers within an Steven L Skancke, 1880: Randall J. Miller, Acting Director, institution of any existing time deposit Office of Policy Analysis. National to the new IRA/Keogh category will be Executive Secretary. DEPOSITORY INSTITUTIONS DEREGULATION COMMITTEE PRINTED IN NEW YORK. FROM FEDERAL REGISTER. VOL. 46, NO. 230
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