The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 96 1 1
January 12, 1984
]
INTEREST ON DEPOSITS
Technical Amendments Conforming Regulation Q to Recent DIDC Actions
To All Depository Institutions, and Others Concerned,
in the Second Federal Reserve District:
The follow ing statem ent has been issued by the B oard o f Governors o f the Federal Reserve
System:
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 Q, effective January 1, 1984, deal with actions of the DIDC at its
June 30 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 deposi
tors effective January 1, 1985 and January 1, 1986. The modifications 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
5l/i percent.
Enclosed is the text o f the technical am endm ents to R egulation Q. Questions may be directed to
our Regulations Division (Tel. No. 212-791-5914).
A
nthony
M.
S olom on,
President.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
IN TER ES T ON DEPOSITS
TEC H N ICA L AM END M ENTS TO REG U LA TIO N Q
(effective January 1, 1984)
12 C m P a rt 2 1 7
[0@ek®4 No. K!=®4®>?]
K e g y la t s o n Q , I n t e r e s t ©n D e p o s i t s ;
Te ch n ie al A m e n d m e n ts
a©ew©y: Board
of Governors of the
Federal Reserve System,
action: Technical amendments.
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
DIDC.
SU M M ARY:
January 1,1984. Other
conforming amendments are effective
January 1,1985, and January 1,1986. See
Supplementary Information below.
E F F E C T IV E O A T E S :
F O R F U R T H E R IN F O R M A T IO N C O N T A C T :
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.
S U P P L E M E N T A R Y IN F O R M A T IO N : 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 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.
OIDC rule
Regulatory provision
amended
1204.103—Penalty for Early with
drawals.
1204.108—Maximum rates of inter
est payable by depository institu
tions on deposits subject to nego
tiable orders of withdrawal.
1204.121—Sevan to 31-day time deposits.
1204.122—Money market deposit
account
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.
217.4(d)(1)(iii>, (d)(6).
217.7(c).
217.1(h), 217.7(b).
(e).
2177(g).
217.7(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. § 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 ©f Subjects ira 12 CFR Part 217
Advertising, Banks, banking, Federal
Reserve System, Foreign banking.
Pursuant to its authority under section
19 of the Federal Reserve Act (12 U.S.C.
461, 371a, and 371b), the Board amends
12 CFR Part 217, effective on the dates
indicated, as follows:
1. Effective January 1,1984:
§ 217.4
I A m ended]
a. Section 217.4 is amended by
removing paragraphs (d)(l)(iii) (D) and
(E) and in paragraph (d)(6) by removing
“subparagraphs (l)(iii)(E) and” and
inserting “paragraph” in its place; and
b. Section 217.7 introductory text 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:
§ 217.7 S u p p lem en t: M aximum ra te s ©1
In te re st p a y a b le by m e m b e r b a n k s @n tim e
a n d sa v in g s d e p o s its
*
*
☆
*
*
(b) Time deposits of less than $2,500
with original maturities or required
notice periods prior to withdrawal of
seven to 31 days. 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 V2 percent.
(c) Savings deposits. (1) Except as
provided in paragraph (g), no member
bank shall pay interest at a rate in
PRINTED IN NEW YORK, FROM FE D E RAL RE G ISTE R , VOL. 48, NO. 249
[Enc. Cir. No. 9611]
(OVER)
excess of-5Vs 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)—
★
*
*
*
*
(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) 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 28 U.S.C.
(I.R.C.-1954) 219, 401, 408 and related
provisions.
☆
a
*
*
*
(e) Seven- to 31-day time deposits.
(l)(i) Notwithstanding 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 days—
(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)(l)(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 accounts.
(l)(i) Notwithstanding 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 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)(l)(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.
*
*
*
§§ 217.1 a n d m . l
*
wherever it appears and inserting
“$1,000” in its place.
3. Effective January 1,1986:
a. Section 217.1(h)(l)(iii) is amended
by removing “(A)”, inserting a period
after the phrase “seven days”, and
removing “or” and paragraph (B); and
b. 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:
§ 217.? S upplem ents [Maximum ra ta s
In te re st p a y a b le by m e m b e r b a n k s @n tim e
a n d sa v in g s d e p o s its
*
*
*
*
*
(c) Savings deposits. * * *
(2)
A member bank may pay interest
on any deposit or account—
(i)
described in § 217.5(c)(2) at a rate
not to exceed 5V4 percent; or (ii) subject
to negotiable or transferable orders of
withdrawal that is authorized pursuant
to 12 U.S.G. 1832(a) at any rate agreed to
by the depositor.
*
*
*
*
*
(e)
Seven- to 31-day time deposits. (1)
Notwithstanding 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) M oney market deposit accounts.
(1) Notwithstanding paragraph (c), a
member bank may pay interest at any
rate on a deposit account as described
in this paragraph.
*
*
*
*
*
*
[A m ended]
2. Effective January 1,1985:
§ | 217.1 (h) (1) (iii) (B) and 217.7 are
amended by removing “$2,500”
By order of the Board of Governors,
December 19,1983.
William W. Wiles,
Secretary of the Board.
[FR Doc. 83-34157 Filed 12-23-83; 8:45 am]
@FedFRASER