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Board of Governors of the Federal Reserve System

Regulation Q
Interest on Deposits
12 CFR 217; as amended effective January 1, 1984




Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the
Federal Reserve District in which the inquiry arises.
January 1984



c

Contents

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Section 217.0—Scope of part ....................
Section 217.1—Definitions........................
(a) Demand deposits............................
(b) Time deposit....................................
(c) [Reserved]
(d) [Reserved]
(e) Savings deposit................................
(f) Deposits as including certain
promissory notes and other
obligations......................................
(g) Multiple-maturity time deposit. . . .
(h) Obligations issued by the parent
bank holding company of a member
b a n k ................................................
(i) Credit balances................................
(j) Foreign b a n k ..................................
(k) Any deposit that is payable only at
an office located outside of the
states of the United States and the
District of Columbia......................
(l)
International banking facility time
deposit..............................................
Section 217.2—Demand deposits..............
(a) Interest prohibited..........................
(b) Meaning of interest........................
Section 217.3—Interest on time and
savings deposits......................................
(a) Maximum rate................................
(b) Modification of contracts to
conform to regulation....................
(c) Member banks limited to maximum
rate for state banks..........................
(d) Grace periods in computing interest
on savings deposits..........................
(e) Computation of interest..................
(f) No interest after maturity or
expiration of n o tice........................
(g) Time deposits of foreign
governmental entities and
international organizations............
Section 217.4— Payment of time deposits
before maturity........................................
(a) Time deposits payable on a
specified d a te ..................................
(b) Time deposits payable after a
specified period................................




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(c) Time deposits payable after a
specified notice............................... 6
(d) Penalty for early withdrawals........ 7
(e) Disclosure of early withdrawal
penalty.......................................... 9
(0 Loans upon security of time
deposits.......................................... 9
Section 217.5—Withdrawal of savings
deposits.................................................. 9
(a) Requirements regarding notice of
withdrawal.................................... 9
(b) Loans on security of savings
deposits.......................................... 9
(c) Manner of payment of savings
deposits............................................10
Section 217.6—Advertising of interest on
deposits.................................................... 11
(a) Annual rate of simple interest........11
(b) Percentage yields based on one year 11
(c) Percentage yields based on periods
in excess of one year.........................11
(d) Time or amount requirements . . . . 11
(e) Penalty for early withdrawals........11
(f) Profit................................................11
(g) Accuracy of advertising................... 11
(h) Solicitation of deposits for banks ..11
Section 217.7—Supplement: Maximum
rates of interest payable by member
banks on time and savings deposits . . . . 11
(a) Time deposits of $100,000 or more,
or with original maturities or
required notice periods of 32 days
or more, or IBF time deposits........12
(b) Time deposits of less than $2,500
with original maturities or required
notice periods prior to withdrawal
of 7 to 31 d a y s .................................12
(c) Savings deposits...............................12
(d) Governmental-unit time deposits .. 13
(e) Seven-to 31-day time deposits . . . . 13
(f) Obligations of the parent bank
holding company of a member bank 14
(g) Money market deposit accounts . . . 14
STATUTORY PROVISIONS
Federal Reserve Act section 19................. 17
Depository Institutions Deregulation A c t . 18
i

Regulation Q
Interest on Deposits
12 CFR 217; as amended effective January 1, 1984

SECTION 217.0—Scope of Part
(a) This part* is issued under authority of
provisions of section 19 of the Federal Re­
serve Act which, together with related provi­
sions of law, are cited in the appendix, f

which is payable on demand,” hereinafter re­
ferred to as a “demand deposit,” includes ev­
ery deposit which is not a “time deposit,” “in­
ternational banking facility time deposit,” or
“savings deposit,” as defined in this section.

“Time deposit”

SECTION 217.1—Definitions

(b) (1)
means (i) a deposit
that the depositor does not have a right
to withdraw for a period of seven days or
more after the date of deposit. “Time de­
posit” includes funds—
(A) payable on a specified date not
less than seven days after the date of
deposit;
(B) payable at the expiration of a
specified time not less than seven days
after the date of deposit;
(C) payable upon written notice
which actually is required to be given
by the depositor not less than seven
days before the date of repayment; 1 or
(D) such as “Christmas club” ac­
counts and “vacation club” accounts,
that are deposited under written con­
tracts providing that no withdrawal
shall be made until a certain number of
periodic deposits have been made dur­
ing a period of not less than seven days
from the end of the period; and
(ii) an “international banking facility
time deposit.”
(2) A time deposit may be represented by
a transferable or nontransferable, or a nego­
tiable or nonnegotiable, certificate, instru­
ment, passbook, statement or otherwise. A
time deposit evidenced by a certificate or
instrument is payable only upon presenta­
tion of the certificate or instrument. A time
deposit established in statement, bookentry, or other form must be evidenced by a
written agreement, and deposits must be
confirmed by issuance of a receipt or
advice.

(a)

(c) [Reserved].

(b) This part relates to the payment of de­
posits and interest thereon by member banks
of the Federal Reserve System and not to the
computation and maintenance of the reserves
which member banks are required to maintain
against deposits. The rules concerning re­
serves of member banks are contained in part
204 of this chapter.
(c) Under authority of the provisions of sec­
tion 7 of the International Banking Act of
1978 (12 USC 3105), the provisions of this
part apply to a federal branch or agency of a
foreign bank and to a state uninsured branch
or agency of a foreign bank in the same man­
ner and to the same extent as if the branch or
agency were a member bank, except as may be
otherwise provided by the Board, if (i) its
parent foreign bank has total worldwide con­
solidated bank assets in excess of $1 billion;
(ii) its parent foreign bank is controlled by a
foreign company which owns or controls for­
eign banks that in the aggregate have total
worldwide consolidated bank assets in excess
of $1 billion; or (iii) its parent foreign bank is
controlled by a group of foreign companies
that own or control foreign banks that in the
aggregate have total worldwide consolidated
bank assets in excess of $1 billion.
(d) The provisions of this part do not apply
to any deposit that is payable only at an office
located outside of the states of the United
States and the District of Columbia of a mem­
ber bank or of a foreign bank.

Demanddeposits. The term “any deposit

* T h e words “this part,” as used herein, mean R e g u la tion Q (C o d e o f Federal Regulations, title 12, chapter I I,

1 A deposit w ith respect to w hich the bank m erely ra­
serves the right to require notice o f not less than seven days

part 217).
t These statutory provisions begin on page 17.

before any w ithdraw al is m ade is not a “time deposit” within the m eaning o f the above definition.




1

§217.1

(d) [Reserved],
(e) “Savings deposit” means a deposit—
(1) That consists of funds deposited to the
credit of or in which the entire beneficial
interest is held by one or more individuals,
or of a corporation, association, or other or­
ganization operated primarily for religious,
philanthropic, charitable, educational, fra­
ternal, or other similar purposes and not
operated for profit;2 or that consists of
funds deposited to the credit of or in which
the entire beneficial interest is held by the
United States, any state of the United
States, or any county, municipality, or po­
litical subdivision thereof, the District of
Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, American Samoa,
Guam, or political subdivision thereof; or
that consists of funds deposited to the credit
of, or in which any beneficial interest is held
by a corporation, association, or other orga­
nization not qualifying above to the extent
such funds do not exceed $150,000 per such
depositor at a member bank; and
(2) With respect to which the depositor is
not required by the deposit contract but
may at any time be required by the bank to
give written notice of an intended with­
drawal not less than seven days before such
withdrawal is made 3 and which is not pay­
able on a specified date or at the expiration
of a specified time after the date of deposit.
(3) (i) Deposits subject to negotiable orders
of withdrawal may be maintained if such
deposits consist of funds in which the en­
tire beneficial interest is held by (A) one
or more individuals; (B) a corporation,
association, or other organization operat­
ed primarily for religious, philanthropic,
charitable, educational, fraternal, or oth­
er similar purposes and not operated for
profit; or (C) the United States, any state
of the United States, county, municipali­
2 D eposits in joint accounts o f two or m ore individuals
m ay be classified as savings deposits if they meet the other
requirements o f the above definition. D eposits o f a partner­
ship operated for profit m ay also be classified as savings to
the extent such deposits do not exceed $150,000 per part­
nership at a member bank.
3 T h e exercise by the bank o f its rights to require such
notice shall not cause the deposit to cease to be a savings
deposit.

Regulation Q

ty, or political subdivision thereof, the
District of Columbia, the Common­
wealth of Puerto Rico, American Samoa,
Guam, any territory or possession of the
United States, or any political subdivi­
sion thereof.
(ii) Deposits in which any beneficial in­
terest is held by a corporation, partner­
ship, association, or other organization
that is operated for profit or is not oper­
ated primarily for religious, philanthrop­
ic, charitable, educational, fraternal, or
other similar purposes, or that is not a
governmental unit described in subpara­
graph (i) (C) may not be classified as de­
posits subject to negotiable orders of
withdrawal, except as authorized by sec­
tion 217.7(g).
(4) “Savings deposit” also means a deposit
issued pursuant to section 217.7(c) (2) (ii)
or section 217.7(g) with respect to which
the member bank reserves the right to re­
quire at least seven days’ notice prior to
withdrawal or transfer.

<

(f) Deposits as including certain promissory
notes and other obligations. For the purposes
of this part, the term “deposits” also includes
any member bank’s liability on any promisso­
ry note, acknowledgment of advance, due bill,
or similar obligation (written or oral) that is
issued or undertaken by a member bank prin­
cipally as a means of obtaining funds to be
used in its banking business, except any such
obligation that—
(1) Is issued to (or undertaken with re­
spect to) and held for the account of (i) a
bank or an institution the time deposits of
which are exempt from section 217.7 pursu­
ant to section 217.3(g), or (ii) the United
States or an agency thereof, or the Govern­
ment Development Bank for Puerto Rico;
(2) Evidences an indebtedness arising
from a transfer of direct obligations of, or
obligations that are fully guaranteed as to
principal and interest by, the United States
or any agency thereof that the bank is obli­
gated to repurchase;
(3) (i) Bears on its face, in boldface type
the following:
“This obligation is not a deposit and is not
insured by the Federal D eposit Insurance
Corporation”;

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Regulation Q

is subordinated to the claims of depositors,
is unsecured, and is ineligible as collateral
for a loan by the issuing bank and also ex­
pressly states said provisions on its face; has
an original maturity of at least seven years,
or, in the case of an obligation or issue that
provides for any type of scheduled
repayments of principal, has an average ma­
turity 4 of at least seven years 5 and pro­
vides that once any such repayment of prin­
cipal begins, all scheduled repayments shall
be made at least annually and the amount
repaid in each year is no less than in the
prior year; is issued subject to a require­
ment that no repayment (other than a regu­
larly scheduled repayment already ap­
proved by the appropriate federal bank
regulatory agency), including but not limit­
ed to a payment pursuant to acceleration of
maturity, may be made without the prior
written approval of the appropriate federal
bank regulatory agency; 6 is in an amount
of at least $500, Except, That the appropri­
ate federal bank regulatory agency may ap­
prove the issuance of an obligation that is
less than $500 if such lesser amount is nec­
essary (a) to satisfy the preemptive rights
of shareholders in the case of a convertible
debt obligation, (b) to maintain a ratable
unit offering to holders of preemptive rights
in the case of an obligation issued exclusive­
ly as part of a unit including shares of stock
which are subject to such preemptive rights,
or (c) to satisfy shareholders’ ratable
claims in the case of an obligation issued
wholly or partially in exchange for shares of
voting stock or assets pursuant to a plan of
merger, consolidation, reorganization, or
other transaction where the issuer will ac­
quire either a majority of such shares of
voting stock or all or substantially all of the
assets of the entity whose assets are being
acquired; and has been approved by the ap­
propriate federal bank regulatory agency as
4 The “average m aturity” o f an obligation or issue repay­
able in scheduled periodic paym ents shall be the weighted
average o f the m aturities o f all such scheduled repayments.
6
In a serial issue the member bank m ay offer n o note
with m aturity o f less than five years.
6 F o r the purposes o f this part, the “appropriate federal
bank regulatory agency” is the Com ptroller o f the Cu rre n ­
cy in the case of a national bank and the Bo ard o f G o v e r­
nors in the case o f a state member bank.




§217.1

an addition to the capital structure of the
issuing bank; or (ii) meets all of the re­
quirements in the preceding clause except
the maturity requirement or the require­
ment that scheduled repayments shall be in
amounts at least equal to those made in a
previous year; and with respect to which
the appropriate federal bank regulatory
agency has determined that exigent circum­
stances require the issuance of such obliga­
tions without regard to the provisions of
this part; or (iii) was issued or publicly of­
fered before June 30, 1970, with an original
maturity of more than two years; or
(4) Arises from a borrowing by a member
bank from a dealer in securities, for one
business day, of proceeds of a transfer of
deposit credit in a Federal Reserve Bank
(or other immediately available funds),
commonly referred to as “federal funds,”
received by such dealer on the date of the
loan in connection with clearance of securi­
ties transactions.
This paragraph shall not, however, affect (i)
any instrument issued before June 27, 1966, or
(ii) any instrument that evidences an indebt­
edness arising from a transfer of assets under
repurchase agreement issued before July 25,
1969.
(g) Multiple-maturity time deposit. The term
“multiple-maturity time deposit” means any
time deposit (1) that is payable at the deposi­
tor’s option on more than one date, whether
on a specified date or at the expiration of a
specified time after the date of deposit (e.g., a
deposit payable at the option of the depositor
either three months or six months after the
date of deposit), (2) that is payable after writ­
ten notice of withdrawal, or (3) with respect
to which the underlying instrument or con­
tract or any informal understanding or agree­
ment provides for automatic renewal at
maturity.
(h) Obligations issued by the parent bank
holding company of a member bank. (1) For
purposes of this part, the “deposits” of a
member bank also includes an obligation
that is (i) required to be registered with the
Securities and Exchange Commission under
the Securities Act of 1933; (ii) issued or
3

§217.1

guaranteed in whole or in part as to princi­
pal and interest by the member bank’s par­
ent which is a bank holding company under
the Bank Holding Company Act of 1956, as
amended (12 USC 1841-1850), regardless
of the use of the proceeds; and (iii) (A) is­
sued in a denomination of less than
$100,000 and with a stated maturity, notice
period, or redemption period of less than 7
days or (B) issued in a denomination of less
than $2,500* and with a stated maturity,
notice period, or redemption period of 7 to
31 days.f
(2) The term “deposits” does not include
those obligations of a bank holding compa­
ny that are subject to interest rate limita­
tions imposed pursuant to Public Law
89-597.
(i) Credit balances. For purposes of this part,
the term “deposits” also includes the credit
balances of a United States branch or agency
of a foreign bank.
(j) Foreign bank. “Foreign bank” means
any bank organized under the laws of any
country other than the United States (includ­
ing its states and the District of Columbia), or
organized under the laws of Puerto Rico,
Guam, American Samoa, the Virgin Islands,
or a territory of the United States.
(k) “Any deposit that is payable only at an
office located outside of the states of the United
States and the District of Columbia ” means
(l) a deposit of a U.S. resident7 (as defined
in 12 CFR 204.2(s)) that is in a denomina­
tion of $100,000 or more, and as to which the
depositor is entitled under the agreement with
the institution, to demand payment only out­
side the states of the United States or the Dis­
trict of Columbia or (2) a deposit of a person
who is not a United States resident7 as to
* Effective January 1, 1985, “$2,500” is amended to
“ $ 1,000” .

f Effective January 1, 1986, section 217.1 (h )( 1 ) (iii) is
amended by rem oving “ ( A ) ”, inserting a period after the
phrase “7 days”, and rem oving “or” and paragraph ( B ).
7
A deposit o f a foreign branch, office, subsidiary, affiliate
or other foreign establishment ( “foreign affiliate” ) con­
trolled by one or more domestic corporations is not regard­
ed as a deposit o f a U nited States resident if the funds serve
a purpose in connection with its foreign or international
business or that o f other foreign affiliates o f the controlling
dom estic corporation (s).

4




Regulation Q

which the depositor is entitled under the
agreement with the institution to demand pay­
ment only outside the states of the United
States or the District of Columbia.
(/) “International banking facility time de­
posit” or “IBF time deposit” means a deposit,
placement, borrowing or similar obligation
represented by a promissory note, acknowl­
edgment of advance, or similar instrument
that is not issued in negotiable or bearer form
and
(1) (i) that must remain on deposit at the
IBF at least overnight; and
(ii) that is issued to—
(A) any office located outside the
United States of another depository in­
stitution organized under the laws of
the United States or of an Edge or
agreement corporation;
(B) any office located outside the
United States of a foreign bank;
(C) a United States office or a nonUnited States office of the entity estab­
lishing the IBF;
(D) another IBF; or
(E) an institution whose time deposits
are exempt from interest rate limita­
tions under section 217.3(g) of this
part; or
(2) (i) that is payable—
(A) on a specified date not less than
two business days after the date of
deposit;
(B) upon expiration of a specified pe­
riod of time not less than two business
days after the date of deposit; or
(C) upon written notice that actually
is required to be given by the depositor
not less than two business days prior to
the date of withdrawal;
(ii) that represents funds deposited to
the credit of a non-United States resident
or a foreign branch, office subsidiary, af­
filiate, or other foreign establishment
(“foreign affiliate”) controlled by one or
more domestic corporations provided
that such funds are used only to support
the operations outside the United States
or the depositor or of its affiliates located
outside the United States; and

Regulation Q

(iii) that is maintained under an agree­
ment or arrangement under which no de­
posit or withdrawal of less than $100,000
is permitted, except that a withdrawal of
less than $100,000 is permitted if such
withdrawal closes an account.

SECTION 217.2—Demand Deposits
(a) Interest prohibited. Except as provided by
section 19 of the Federal Reserve Act, no
member bank of the Federal Reserve System
shall, directly or indirectly, by any device
whatsoever, pay any interest on any demand
deposit. The maximum rate of interest that
may be paid by a member bank on an addi­
tional deposit to any existing time deposit
shall not exceed the maximum rate that may
be paid in accordance with section 217.7 on
the date the additional deposit is made.
(b) Meaning o f interest. Within this part, any
payment to or for the account of any deposi­
tor as compensation for the use of funds con­
stituting a deposit shall be considered interest.

SECTION 217.3—Interest on Time and
Savings Deposits

§217.3

possible consistently with its contractual obli­
gations, to bring all of its outstanding certifi­
cates of deposit or other contracts into con­
formity with the provisions of this part.
(c) Member banks limited to maximum rate
for state banks. The rate of interest paid by a
member bank upon a time deposit or savings
deposit shall not in any case exceed (1) the
applicable maximum rate prescribed pursuant
to the provisions of paragraph (a) of this sec­
tion, or (2) the applicable maximum rate au­
thorized by law to be paid upon such deposits
by state banks or trust companies organized
under the laws of the state in which such
member bank is located, whichever may be
less.
(d) Grace periods in computing interest on
savings deposits. A member bank may pay in­
terest on a savings deposit received during the
first 10 calendar days of any calendar month
at the applicable maximum rate prescribed
pursuant to paragraph (a) of this section cal­
culated from the first day of such calendar
month until such deposit is withdrawn or
ceases to constitute a savings deposit under
the provisions of this part, whichever shall
first occur; and a member bank may pay inter­
est on a savings deposit withdrawn during its
last 3 business days of any calendar month
ending a regular quarterly or semiannual in­
terest period at the applicable maximum rate
prescribed pursuant to paragraph (a) of this
section calculated to the end of such calendar
month.

(a) Maximum rate. Except as provided in
this section, no member bank shall, directly or
indirectly, by any device whatsoever, pay in­
terest on any time or savings deposit at a rate
in excess of such applicable maximum rate as
the Board of Governors of the Federal Re­
serve System shall prescribe from time to time
in section 217.7. The effects of compounding
of interest may be disregarded in ascertaining
the rate of interest paid. The maximum rate of
interest that may be paid by a member bank
on an additional deposit to any existing time
deposit shall not exceed the maximum rate
that may be paid in accordance with section
217.7 on the date the additional deposit is
made.

(e) Computation of interest. In the computa­
tion of simple daily interest, the time factor
should be expressed as a fraction in which the
actual number of days the funds earn interest
is the numerator, and the denominator is ei­
ther 360, 365, or, in a leap year, 366. Howev­
er, when a deposit matures in one month (or
multiples thereof), the bank may use 30 days
in the numerator (or corresponding multiples
thereof.)

(b) Modification of contracts to conform to
regulation. No certificate of deposit or other
contract shall be renewed or extended unless
it be modified to conform to the provisions of
this part, and every member bank shall take
such action as may be necessary, as soon as

(f) No interest after maturity or expiration of
notice. After the date of maturity of any time
deposit, such deposit is a demand deposit, and
no interest may be paid on such deposit for
any period subsequent to such date. After the
expiration of the period of notice given with




5

_______
§217.3

respect to the repayment of any time deposit
or savings deposit, such deposit is a demand
deposit and no interest may be paid on such
deposit for any period subsequent to the expi­
ration of such notice, except that, if the owner
of such deposit advises the bank in writing
that the deposit will not be withdrawn pursu­
ant to such notice or that the deposit will
thereafter again be subject to the contract or
requirements applicable to such deposit, the
deposit will again constitute a time deposit or
savings deposit, as the case may be, after the
date upon which such advice is received by
the bank. On each certificate, passbook, or
other document representing a time deposit,
the bank shall have printed or stamped a con­
spicuous statement indicating that no interest
will be paid on the deposit after the maturity
date or, in the case of a time deposit that is
automatically renewable, a conspicuous state­
ment indicating that the contract will be re­
newed automatically upon maturity, and indi­
cating the terms of such renewal, Provided,
however, that a member bank may provide in
any time deposit contract that if the deposit,
or any portion thereof, is withdrawn not more
than seven calendar days after a maturity date
(one business day for deposits authorized by
section 217.7 (e)), interest will be paid there­
on at the originally specified contract rate. A
member bank may specify in the time deposit
contract that interest will be paid at any other
lower rate. However, in no event may the rate
specified be less than the current rate paid on
savings deposits by the member bank.

___
Regulation Q

tional entity specifically designated by the
Board as exempt from section 217.7. All cer­
tificates of deposit issued by member banks to
such entities on which the contract rate of in­
terest exceeds the maximum prescribed under
section 217.7 shall provide that (1) in the
event of transfer, the date of transfer, attested
to in writing by the transferor, shall appear on
the certificate, and (2) the maximum rate lim­
itations of section 217.7 in effect at the date of
issuance of the certificate shall apply to the
certificate for any period during which it is
held by a person other than an entity exempt
therefrom under the foregoing sentence.9
Upon the presentment of such a certificate for
payment, the bank may pay the holder the
contract rate of interest on the deposit for the
time that the certificate was actually owned by
an entity so exempt.

SECTION 217.4— Payment of Time
Deposits Before M aturity
(a) Time deposits payable on a specified date.
No member bank shall pay any time deposit,
which is payable on a specified date, before
such specified date, except as provided in par­
agraph (d) of this section.
(b) Time deposits payable after a specified pe­
riod. No member bank shall pay any time de­
posit, which is payable at the expiration of a
certain specified period, before such specified
period has expired, except as provided in par­
agraph (d) of this section.

(g) Time deposits of foreign governmental en­
tities and international organizations. Section (c) Time deposits payable after a specified no­
217.7 does not apply to the rate of interest tice. No member bank shall pay any time de­
that may be paid by a member bank on a time posit, with respect to which notice is required
deposit having a maturity of two years or less to be given a certain specified period before
and representing funds deposited and owned any withdrawal is made, until such required
by (1) a foreign national government, or an notice has been given and the specified period
agency or instrumentality thereof8 engaged thereafter has expired, except as provided in
principally in activities which are ordinarily paragraph (d) of this section.
performed in the United States by governmen­
tal entities, (2) an international entity of
9 A new certificate not m atu ring prior to the m aturity
which the United States is a member, or (3)
any other foreign, international, or suprana- date o f the original certificate m ay be issued by the member
bank to the transferee, in w hich event the original m ust be
retained by the bank. T h e new certificate m ay not provide
8
O ther than states, provinces, m unicipalities or other re­for interest after the date o f transfer at a rate in excess o f
the applicable m axim u m rate authorized by section 217.7
gional or local governmental units, or agencies or instru­
as o f the date o f issuance o f the original certificate.
mentalities thereof.

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Regulation Q

Penaltyfor early withdrawals.

(d)
(1) (i) For time deposit contracts entered
into before July 1, 1979, that have not
been renewed or extended on or after
July 1, 1979, the following minimum ear­
ly withdrawal penalty shall apply:
Where a time deposit, or any portion
thereof, is paid before maturity, a mem­
ber bank may pay interest on the amount
withdrawn at a rate not to exceed that
prescribed in section 217.7 for a savings
deposit and, in addition, the depositor
shall forfeit three months of interest pay­
able at such rate. If, however, the amount
withdrawn has remained on deposit for
three months or less, all interest shall be
forfeited.
(ii) For time deposit contracts entered
into, renewed, or extended on or after
July 1, 1979, but prior to June 2, 1980,
that have not been renewed or extended
on or after June 2, 1980, the following
minimum early withdrawal penalty shall
apply:
(A) Where a time deposit with an
original maturity or required notice
period of one year or less, or any por­
tion thereof, is paid before maturity or
before the expiration of the required
notice period, a depositor shall forfeit
at least three months of interest on the
amount withdrawn at the rate being
paid on the deposit. If the amount
withdrawn has remained on deposit for
less than three months, all interest on
the amount withdrawn shall be
forfeited.
(B) Where a time deposit with an
original maturity or required notice
period of more than one year, or any
portion thereof, is paid before maturity
or before the expiration of the required
notice period, a depositor shall forfeit
at least six months of interest on the
amount withdrawn at the rate being
paid on the deposit. If the amount has
remained on deposit for less than six
months, all interest on the amount
withdrawn shall be forfeited. (The
provisions of this subparagraph (ii)
may be applied, with the consent of the



§217.4

depositor, to time deposits specified in
subparagraph (i) above.)
(iii) The following minimum early with­
drawal penalty shall apply to time
deposit contracts entered into, renewed,
or extended between June 2, 1980, and
September 30, 1983, and that have not
been renewed or extended on or after
October 1, 1983:
(A) Where a time deposit with an
original maturity or required notice
period of less than three months, or
any portion thereof, is paid before ma­
turity, a depositor shall forfeit an
amount at least equal to the amount of
interest that could have been earned on
the amount withdrawn at the nominal
(simple interest) rate being paid on
the deposit had the funds remained on
deposit until maturity.
(B) Where a time deposit with an
original maturity or required notice
period of three months or more to one
year, or any portion thereof, is paid be­
fore maturity, a depositor shall forfeit
an amount at least equal to three
months of interest earned, or that
could have been earned, on the amount
withdrawn at the nominal (simple in­
terest) rate being paid on the deposit,
regardless of the length of time the
funds withdrawn have remained on
deposit.
(C) Where a time deposit with an
original maturity or required notice
period of more than one year, or any
portion thereof, is paid before maturi­
ty, a depositor shall forfeit an amount
at least equal to six months of interest
earned, or that could have been
earned, on the amount withdrawn at
the nominal (simple interest) rate be­
ing paid on the deposit, regardless of
the length of time the funds withdrawn
have remained on deposit.
(iv) The following minimum early with­
drawal penalty shall apply to time depos­
it contracts entered into, renewed, or ex­
tended on or after October 1, 1983:
(A) Where a time deposit with an
original maturity or required notice
period of 7 to 31 days, or any portion
7

§217.4

Regulation Q

thereof, is paid before maturity, a de­
positor shall forfeit an amount at least
equal to the greater of (7) all interest
earned on the amount withdrawn from
the most recent of the date of deposit,
date of maturity, or date on which no­
tice of withdrawal was given, or (2) all
interest that could have been earned on
the amount withdrawn during a period
equal to one-half the maturity period
or the required notice period.
(B) Where a time deposit with an
original maturity or required notice
period of 32 days to one year, or any
portion thereof, is paid before maturi­
ty, a depositor shall forfeit an amount
at least equal to one month’s interest
earned, or that could have been
earned, on the amount withdrawn at
the nominal (simple interest) rate be­
ing paid on the deposit, regardless of
the length of time the funds withdrawn
have remained on deposit.
(C) Where a time deposit with an
original maturity or required notice
period of more than one year, or any
portion thereof, is paid before maturi­
ty, the depositor shall forfeit an
amount at least equal to three months’
interest earned, or that could have
been earned, on the amount withdrawn
at the nominal (simple) interest rate
being paid on the deposit, regardless of
the length of time the funds withdrawn
have remained on deposit.
(2) Notwithstanding the provisions of subparagraph (1), where a time deposit, or any
portion thereof, maintained in an individual
retirement account established in accord­
ance with 26 USC 408 is paid before matu­
rity within seven days after the establish­
ment of the individual retirement account
pursuant to the provisions of 26 CFR
1.408—(1) (d)(4), or where a time deposit,
or any portion thereof, maintained in a
Keogh (H.R. 10) plan account established
in accordance with 26 USC 401 is paid be­
fore maturity within seven days after the
establishment of the Keogh (H.R. 10) plan,
a depositor shall forfeit an amount at least
equal to the interest earned on the amount
8




withdrawn at the nominal (simple interest)
rate being paid on the deposit.
(3) A member bank, with the depositor’s
consent, may compute the minimum penal­
ty required to be imposed on withdrawals
from time deposits opened prior to June 2,
1980, on the basis of the nominal (simple
interest) rate.
(4) Where necessary to comply with the
requirements of this paragraph, any interest
already paid to or for the account of the
depositor shall be deducted from the
amount requested to be withdrawn.
(5) Any amendment of a time deposit con­
tract that results in an increase in the rate
of interest paid, except for time deposits on
which no maximum interest limitation is
prescribed, or any amendment of a time de­
posit contract that results in a reduction in
the maturity of the deposit constitutes pay­
ment of a time deposit before maturity.
(6) For purposes of computing the penalty
required to be imposed under this para­
graph, under a time deposit agreement that
provides that subsequent deposits reset the
maturity of the entire account, each deposit
maintained in the account for at least a pe­
riod equal to the original maturity of the
deposit may be regarded as having matured
individually and been redeposited at inter­
vals equal to such period. Except as provid­
ed in paragraph (l)(iv )(A ), when a time
deposit is payable only after notice, for
funds on deposit for at least the notice peri­
od, the penalty for early withdrawal shall
be imposed for at least the notice period.
(7) A member bank may permit a deposi­
tor to withdraw interest credited to a time
deposit during any term at any time during
such term without penalty. If the deposit or
account is automatically renewed on the
same terms (including at the same rate of
interest), interest credited during the pre­
ceding term or terms as well as the renewal
term may be paid at any time during the
renewal term without penalty, unless the
deposit agreement specifically provides oth­
erwise. If the rate of interest paid during the
renewal term or the maturity period of the
renewal term is different, interest in the ac­
count at the commencement of the renewal

Regulation Q

term shall be treated as principal, and only
interest for the renewal term may be paid at
any time without penalty during such term.
(8) A time deposit, or a portion thereof,
may be paid before maturity without a for­
feiture of interest as prescribed by this para­
graph in the following circumstances:
(i) Where a member bank pays all or a
portion of a time deposit representing
funds contributed to an individual retire­
ment account or a Keogh (H. R. 10)
plan established pursuant to 26 USC
(IRC 1954) 408, 401 when the individu­
al for whose benefit the account is main­
tained attains age 59| or is disabled (as
defined in 26 USC (IRC 1954) 72(m)(7)) or thereafter; or
(ii) Where a member bank pays that
portion of a time deposit on which feder­
al deposit insurance has been lost as the
result of the merger of two or more feder­
ally insured banks in which the depositor
previously maintained separate time de­
posits, for a period of one year from the
date of the merger.
(9) A time deposit, or the portion thereof
requested, must be paid before maturity
without a forfeiture of interest as prescribed
by this paragraph in the following
circumstances:
(i) Where requested, upon the death of
any owner 10 of the time deposit funds; or
(ii) Where requested, when the owner 10
of the time deposit is determined to be
legally incompetent by a court or oth­
er administrative body of competent
jurisdiction.

§217.5

customer has contracted to keep his funds on
deposit for the stated maturity, and (2) de­
scribe fully and clearly how such penalty pro­
visions apply to time deposits in such bank, in
the event the bank, notwithstanding the con­
tract provisions, permits payment before ma­
turity. Such statements shall be expressly
called to the attention of the customer.
(f) Loans upon security of time deposits. Ex­
cept as provided in section 217.7 (e)(2), a
member bank may make a loan to the deposi­
tor upon the security of his time deposit pro­
vided that the rate of interest on such loan
shall be not less than 1 percent per annum in
excess of the rate of interest on the time
deposit.

SECTION 217.5—Withdrawal of
Savings Deposits
(a) Requirements regarding notice of with­
drawal. Whether or not interest is paid, no

member bank shall require or waive notice of
withdrawal as to any amount or percentage of
the savings deposit of any depositor unless it
shall similarly require or waive such notice as
to the same amount or percentage of the sav­
ings deposits of every other depositor which
are subject to the same contractual provisions
with respect to notice of withdrawal. If a
member bank, without requiring notice of
withdrawal, pays interest that has accrued on
a savings deposit during the preceding interest
period, it shall, upon request and without re­
quiring such notice, pay interest that has ac­
crued during said period on the savings depos­
its of every other depositor. No member bank
(e) Disclosure of early withdrawal penalty. At
shall change its practice with respect to the
the time a depositor enters into a time deposit
requiring or waiving of notice of withdrawal
contract with a member bank, the bank shall
of savings deposits for the purpose of discrimi­
provide a written statement of the effect of the
nating in favor of or against any depositor or
penalty prescribed in paragraph (d) of this
depositors, and no such change of practice
section, which shall (1) state clearly that the
shall be made except pursuant to duly record­
ed action of the bank’s board of directors or a
10
F o r the purposes o f this provision, an “owner” of
properly authorized committee thereof.
time deposit funds is any individual w ho died or was deter­
mined to be incompetent on or after A u g u st 1, 1979, and
w ho at the time o f his or her death or determination of
incompetence had full legal and beneficial title to all or a
portion o f such funds or, at the time o f his or her death or
determination of incompetence, had beneficial title to all or
a portion o f such funds and full power o f disposition and
alienation with respect thereto.




(b) Loans on security of savings deposits. If it
is not the practice of a member bank to re­
quire notice of withdrawal of savings deposits,
no restrictions are imposed by this part upon
loans by such bank to its depositors upon the
9

§217.5

security of such deposits. If it is the practice of
a member bank to require notice of withdraw­
al of a savings deposit, such bank may make
loans to a depositor upon the security of such
deposit, but the rate of interest on such loans
shall be not less than 1 percent per annum in
excess of the rate of interest paid on such
deposit.

Manner ofpayment ofsavings deposits.

(c)
(1) Subject to the provisions of subpara­
graphs (2) and (3) of this paragraph and
section 217.7(g), a member bank may per­
mit withdrawals to be made from a savings
deposit only through payment11 to the de­
positor himself (but not to any other person
whether or not acting for the depositor),
except—
(i) where the deposit is represented by a
passbook, to any person presenting the
passbook; 11
(ii) to any executor, administrator,
trustee, or other fiduciary holding the
savings deposit as part of a fiduciary es­
tate, or to a person, other than the bank,
holding a general power of attorney
granted by the depositor;
(iii) to any person, including the bank,
that has extended credit to the depositor
on the security of the savings deposit,
where such payment is made in order to
enable the creditor to realize upon such
security;
(iv) pursuant to the order of a court of
competent jurisdiction;
(v) upon the death of the depositor, to
any person authorized by law to receive
the deposit;
(vi) interest paid to a third person pur­
suant to written instruction or assign­
ment by the depositor accepted by the
bank, and placed on file therein; or
(vii) pursuant to nontransferable with­
drawal orders or authorizations received
from a depositor by a member bank for
the payment of amounts from such de­
posits to third parties, including the bank
(except as prohibited by subparagraph
2), periodically or otherwise. Any such
11
Paym ent from a savings deposit or presentation o f a
passbook m ay be m ade over the counter, through the mails,
or otherwise.

10



Regulation Q

withdrawal order or authorization that
may be honored as a withdrawal request
for payment to a third party may, if so
authorized by the third party, be honored
as a transfer to an account of such third
party. Any form for such withdrawal or­
der or authorization shall contain lan­
guage in boldface type of reasonable size
to the effect that it is not negotiable or
transferable.
(2) Notwithstanding the provisions of subparagraph (1) of this paragraph, withdraw­
als may be permitted by a member bank to
be made automatically or as a normal prac­
tice from a savings deposit that consists
only of funds in which the entire beneficial
interest is held by one or more individuals
through payment to the bank itself or
through transfer of credit to a demand de­
posit or other account pursuant to written
authorization from the depositor to make
such payments or transfers in order to cov­
er checks or drafts drawn upon the bank or
to maintain a specified balance in or to
make periodic transfers to such accounts.
In accordance with section 217.1(e)(2) of
this part, a member bank must reserve the
right to require the depositor to give notice
in writing of an intended withdrawal not
less than seven days before such withdrawal
is made. Such notice shall be prominently
disclosed and specifically brought to the de­
positor’s attention at the time the automatic
transfer service is authorized. A member
bank may not require a depositor to autho­
rize such automatic transfer to be made
from savings deposits.
(3) A member bank may permit depositors
to maintain deposits subject to negotiable
orders of withdrawal where authorized by
federal law.
(4) Where a savings deposit is evidenced
by a passbook, every withdrawal made
upon presentation of the passbook shall be
entered in the passbook at the time of with­
drawal, and every other withdrawal for
such a deposit shall be entered in the pass­
book as soon as practicable after withdraw­
al is made.

Regulation Q

§217.7

Profit.

SECTION 217.6— Advertising of
Interest on Deposits

(f)
The term “profit” shall not be used
in referring to interest paid on deposits.

Every advertisement, announcement, or solic­
itation relating to the interest paid on deposits
in member banks shall be governed by the fol­
lowing rules:

(g)
No member bank
shall make any advertisement, announcement,
or solicitation relating to the interest paid on
deposits that is inaccurate or misleading or
that misrepresents its deposit contracts.

Annual rate of simple interest.

(a)
Interest
rates shall be stated in terms of the annual
rate of simple interest. In no case shall a rate
be advertised that is in excess of the applicable
maximum rate for the particular deposit.

Percentage yields based on one year.

(b)
Where a percentage yield achieved by com­
pounding interest during one year is adver­
tised, the annual rate of simple interest shall
be stated with equal prominence, together
with a reference to the basis of compounding.
No member bank shall advertise a percentage
yield based on the effect of grace periods per­
mitted in section 217.3(d).

(c) Percentageyields based onperiods in ex­
cess of oneyear. No advertisement shall in­
clude any indication of a total percentage
yield, compounded or simple, based on a peri­
od in excess of a year, or an average annual
percentage yield achieved by compounding
during a period in excess of a year.

Time or amount requirements.

(d)
If an ad­
vertised rate is payable only on deposits that
meet time or amount requirements, such re­
quirements shall be clearly and conspicuously
stated. Where the time requirement for an ad­
vertised rate is in excess of a year, the required
number of years for the rate to apply shall be
stated with equal prominence, together with
an indication of any lower rate or rates that
will apply if the deposit is withdrawn at an
earlier maturity.

Penaltyfor early withdrawals.

(e)
Any adver­
tisement, announcement, or solicitation relat­
ing to interest paid by a member bank on time
deposits shall include clear and conspicuous
notice that the bank is prohibited from allow­
ing payment of a time deposit before maturity
unless substantial interest is forfeited. Such
notice may state that—
“Substantial interest penalty is required for early
withdrawal.”




Accuracyofadvertising.

Solicitation of depositsfor banks.

(h)
Any
person or organization that solicits deposits
for a member bank shall be bound by the rules
contained in this section with respect to any
advertisement, announcement, or solicitation
relating to such deposits. No such person or
organization shall advertise a percentage yield
on any deposit it solicits for a member bank
that is not authorized to be paid and adver­
tised by such bank.

SECTION 217.7—Supplement:
Maximum Rates of Interest Payable by
Member Banks on Time and Savings
Deposits*
Pursuant to the provisions of section 19 of the
Federal Reserve Act and section 217.3 of this
part, the Board of Governors of the Federal
Reserve System hereby prescribes the follow-*2
* Effective January 1, 1985, section 217.7 is amended by
rem oving “$2,500” wherever it appears and inserting
“ 1,000” in its place.
Effective January 1, 1986, section 217.7 is amended by
rem oving the text o f paragraph (b ) and inserting “ [R e ­
served]” in its place; by rem oving paragraph ( g ) ( 8 ) ; and
by revising paragraphs ( c ) ( 2 ) , ( e )(1 ), and ( g ) ( 1 ) to read
as follows:
(c ) Savings deposits. (1 ) * * *
(2 ) A member bank m ay pay interest on any deposit or
account ( i ) described in section 2 1 7 .5 (c )(2 ) at a rate not
to exceed 5^ percent; or (ii) subject *o negotiable or trans­
ferable orders o f w ithdraw al that is authorized pursuant to
12 U S C 1832(a) at any rate agreed to by the depositor.
#

if:

%

%

❖

(e ) Seven- to 31-day time deposits. (1 ) N otw ithstan din g
paragraph (d ), a m ember bank m ay pay interest at any rate
as agreed to by the depositor on any tim e deposit with a
m aturity or required notice period prior to m aturity o f not
less than 7 days nor m ore than 31 days.

*

*

*

*

*

( g ) Money market deposit accounts. (1 ) N o tw ithstan d ­
in g paragraph (c ), a member b an k m ay pay interest at any
rate on a deposit account as described in this paragraph.

#

*

*

*

*
11

----------------i____________________ i______

§217.7

ing maximum rates 1 of interest per annum
payable by member banks of the Federal Re­
serve System on time and savings deposits:
(a) Time deposits of $100,000 or more, or
with original maturities or required notice peri­
ods of 32 days or more, or IBF time deposits.
(1) There is no maximum rate of interest
presently prescribed on any time deposit of
$100,000 or more, or with an original matu­
rity or required notice period of 32 days or
more, or on IBF time deposits issued under
section 217.1(7).
(2) Except for IBF time deposits, a mem­
ber bank may permit additional deposits to
be made to any time deposit with an origi­
nal maturity or required notice period of 32
days or more at any time prior to its matu­
rity or expiration of notice period without
extending the maturity or required notice
period of the entire balance in the account.
(b) Time deposits of less than $2,500 with
original maturities or required notice periods
prior to withdrawal o f 7 to 31 days. Except as
provided in paragraphs (d) and (e), no mem­
ber bank shall pay interest on any time depos­
it 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^
percent.
(c) Savings deposits. (1) Except as provided
in paragraph (g), no member bank shall
pay interest at a rate in excess of 5 | 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 USC 1832(a) or
a deposit or account described in section
217.5(c)(2)—
(i) at a rate not to exceed 5 | percent per
annum, or
(ii) (A) at any rate agreed to by the de­
positor on any deposit or account sub­
ject to negotiable or transferable orders
1 T h e lim itation on rates o f interest payable by member
banks o f the Federal Reserve System on time and savings
deposits, as prescribed herein, are not applicable to any
deposit w hich is payable only at an office o f a m ember bank
located outside the states o f the U nited States and the D i s ­
trict o f Colum bia.

12




Regulation Q

of withdrawal that is authorized pursu­
ant to 12 USC 1832(a) subject to the
conditions of this paragraph (c)(2)
with an initial balance and an average
deposit balance (as computed in para­
graph (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 spec­
ified 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 ac­
count issued under this paragraph
(c)(2)(ii), regardless of amount, if
that account consists of funds deposit­
ed to the credit of, or in which the en­
tire beneficial interest is held by, an in­
dividual pursuant to an individual
retirement account agreement or
Keogh (H.R. 10) plan established pur­
suant to 26 USC (IRC 1954) 219, 401,
408 and related provisions.
(B) The average balance in paragraph
(c)(2)(ii)(A ) may be calculated on
the basis of the average daily balance
over any computation period selected
by a member bank which is not longer
than one month. (For purposes of this
paragraph (c)(2)(ii), a “month” shall
mean, at a member bank’s option, a
calendar month or statement cycle. A
statement cycle is normally 28 to 31
days, but may occasionally be as long
as 35 days.)
(C) A member bank may not obligate
itself to pay any interest rate or obli­
gate itself to employ any method of
calculation of an interest rate on this
account for a period longer than one
month. A member bank may not con­
dition the interest rate paid upon the
period of time the funds remain on de­
posit in this account, if that period is
longer than one month.
(D) A member bank must reserve the
right to require at least seven days’ no­
tice prior to withdrawal or transfer of
any funds in this account. If such a re-

Regulation Q

quirement for a notice period is im­
posed by a member bank on one depos­
itor, it must be applied equally to all
other depositors holding an account
subject to this paragraph (c) (2) (ii) at
the same institution.
(E) A member bank is not permitted
to lend funds to a depositor to meet the
$2,500 balance requirements of this
paragraph (c )(2)(ii).
(d) Governmental-unit time deposits. Except
as provided in paragraphs (a) and (e), and
notwithstanding paragraph (b), no member
bank shall pay interest on any time deposit
which consists of funds deposited to the credit
of, or in which the entire beneficial interest is
held by, the United States, any state of the
United States, or any county, municipality or
political subdivision thereof, the District of
Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, American Samoa,
Guam, or political subdivision thereof in ex­
cess of 8 percent.
(e) Seven- to 31-day time deposits. (l)(i)
Notwithstanding paragraph (d), a mem­
ber bank may pay interest at any rate as
agreed to by the depositor on any time
deposit with a maturity or required no­
tice period of not less than 7 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 cred­
it 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 pur­
suant to 26 USC (IRC 1954) 219, 401,
408 and related provisions.
(ii) However, except as provided in par­
agraph (e )(l)(i)(B ), a member bank
shall not pay interest in excess of the ceil­
ing 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.
(2) (i) A member bank is not permit­
ted—
(A) to lend funds to a depositor upon



§217.7

the security of a time deposit that it
has issued under this paragraph, or
(B) to lend funds to a depositor to
meet or maintain the minimum-denomination requirement of a time de­
posit issued under this paragraph.
(ii) The rate of interest and any other
charges imposed on an overdraft credit
arrangement to which withdrawals are
paid or to which payments upon maturi­
ty or expiration of a required notice peri­
od are made from an account issued un­
der this paragraph must be not less than
those imposed on such overdrafts for cus­
tomers that do not possess an account is­
sued under this paragraph at the same
institution.
(3) Where all or any part of a time deposit
issued under this paragraph is withdrawn
within one business day after the maturity
date of the deposit or the date of expiration
of notice of withdrawal, no early withdraw­
al penalty is required to be applied on the
amount withdrawn.
(4) Additional deposits to an account is­
sued under this paragraph with a fixed ma­
turity must be maintained in the account
for a period at least equal to the original
term of the account and may be regarded as
having matured individually and having
been redeposited at intervals equal to such
period. For accounts issued under this para­
graph that are subject to a notice period,
additional deposits must remain in the ac­
count for a period equal to at least the no­
tice period before such funds may be with­
drawn without the imposition of an early
withdrawal penalty.
(5) Deposits to any account issued under
this paragraph may not be made by auto­
matically transferring funds from another
account of the depositor at the same institu­
tion where the transfer is initiated by the
level of the balance in any account.
(6) (i) Withdrawals from any account is­
sued under this paragraph may not be
made—
(A) by check, draft, or other thirdparty payment instrument or instruc­
tion drawn or issued by the depositor,
or
(B) by automatically transferring
13

___
§217.7

funds to another account of the deposi­
tor where the transfer is initiated by
the level of balance in any account
held by the depositor.
(ii) Payments at maturity or withdraw­
als may be paid by—
(A) check or cash to the depositor,
(B) cash, draft, or electronic transfer
issued by the institution to a third par­
ty, or
(C) transfer to any other account
held by the depositor.
(iii) Notice of withdrawal from an ac­
count issued under this paragraph may
be delivered by the depositor to the insti­
tution by telephone or other telecommu­
nication, mail, messenger, standing or­
der, or by appearance in person at the
offices or premises of the institution.
(f) Obligations o f the parent bank holding
company o f a member bank. Interest may be
paid on a deposit as defined in section
217.1 (h) at a rate not to exceed the maximum
rate payable by a member bank on a deposit of
equal maturity and denomination. For pur­
poses of this paragraph, the maturity of an
obligation of a parent bank holding company
is the lesser of the stated maturity period, no­
tice period, or redemption period.
(g) Money market deposit accounts. (1)
(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 indi­
vidual pursuant to an individual retire­
ment account agreement or Keogh
(H.R. 10) plan established pursuant to
26 USC (IRC 1954) 219, 401, 408 and
related provisions.
(ii) However, except as provided in par­
agraph (g )(l)(i)(B ), for an account
with an average balance of less than
$2,500, a member bank shall not pay in­
terest in excess of the ceiling rate speci­
14



—— .__
Regulation Q

fied for NOW accounts under paragraph
(c)(2)(i) of this section for the entire
computation period, as described in para­
graph (g) (2) of this section.
(2) The average balance for this account
may be calculated on the basis of the aver­
age daily balance over any computation pe­
riod selected by the member bank that is
not longer than one month. (For purposes
of this paragraph, a “month” shall mean, at
a member bank’s option, either a calendar
month or a statement cycle. A statement
cycle is normally 28 to 31 days, but may
occasionally be as long as 35 days.)
(3) A member bank is not required to es­
tablish a maturity on this account. Howev­
er, it may do so, provided that the maturity
is no longer than one month. Furthermore,
a member bank may not obligate itself to
pay any interest rate or obligate itself to em­
ploy any method of calculation of an inter­
est rate on this account for a period longer
than one month. A member bank may not
condition the interest rate paid or the meth­
od of calculation of the interest rate paid
upon the period of time funds remain on
deposit in this account, if that period is
longer than one month.
(4) A member bank must reserve the right
to require at least seven days’ notice prior
to withdrawal or transfer of any funds in
this account. If such a requirement for a
notice period is imposed by a member bank
on one depositor, it must be applied equally
to all other depositors holding this account
at the same institution.
(5) (i) A member bank is not required to
limit the number of transfers of funds
from this account to another account of
the same depositor when made by mail,
messenger, automated teller machine or
in person. A member bank is not re­
quired to limit the number of withdraw­
als (i.e., payments directly to the deposi­
tor) from this account when made by
mail, telephone (via check mailed to the
depositor), messenger, automated teller
machine or in person. A member bank
must restrict all preauthorized (including
automatic) transfers of funds from this
account to a maximum of six per month.
Three of such transfers may be by check,

Regulation Q

draft or similar device drawn by the de­
positor to third parties. Telephone trans­
fers to third parties or to another account
of the same depositor are regarded as
preauthorized transfers. There is no re­
quired minimum denomination for the
transfers allowed by this paragraph.
(ii) In order to ensure that no more than
the permitted number of transfers are
made, a member bank must either—
(A) prevent transfers of funds in this
account that are in excess of the limits
established by this subparagraph, or
(B) adopt procedures to monitor
those transfers on an ex post basis and
contact customers who exceed the lim­
its established by this paragraph on
more than an occasional basis. For
customers who continue to violate
those limits after being contacted by
the member bank, the bank will be re­
quired to either close the account or
take away the account’s transfer and
draft capacities.




§217.7

(iii) A member bank, at its option, may
use on a consistent basis either the date
on a check or the date it is paid in apply­
ing the limit on checks established by this
subparagraph (5).
(iv) The rate of interest or other charges
imposed on an overdraft credit arrange­
ment on an account to which withdraw­
als from this account can be paid must be
not less than those imposed on overdrafts
for customers who do not maintain this
account.
(6) A member bank may offer the account
authorized by this paragraph to any
depositor.
(7) A member bank is not required to im­
pose restrictions on the number of addition­
al deposits (including sweeps from other
accounts) into this account.
(8) A member bank is not permitted to
lend funds to a depositor to meet the $2,500
balance requirement of this account.

Statutory Provisions

FEDERAL RESERVE ACT

SECTION 19—Bank Reserves
(a) The Board is authorized for the purposes
of this section to define the terms used in this
section, to determine what shall be deemed a
payment of interest, to determine what types
of obligations, whether issued directly by a
member bank or indirectly by an affiliate of a
member bank or by other means, and, regard­
less of the use of the proceeds, shall be
deemed a deposit, and to prescribe such regu­
lations as it may deem necessary to effectuate
the purposes of this section and to prevent
evasions thereof.
[12 U S C 4 6 1(a). A s amended by acts o f June 21, 1917 (40
Stat. 239) (w hich completely revised this section); A u g.
23, 1935 (49 Stat. 714); Sept. 21, 1966 (80 Stat. 823) (as
amended by acts o f Sept. 21, 1967 (81 Stat. 226) and Sept.
21, 1968 (82 Stat. 8 5 6 )); Dec. 23, 1969 (83 Stat. 374); Oct.
29, 1974 (88 Stat. 1557); and M a r c h 31, 1980 (9 4 Stat.
133, 138). The amendm ent inserting the words “and, re­
gardless o f the use o f the proceeds,” made by the act o f Oct.
29, 1974, “shall not apply to any bank hold in g com pany
w hich has filed prior to the date o f enactment o f this A c t an
irrevocable declaration w ith the B o a rd o f G overn o rs o f the
Federal Reserve System to divest itself o f all o f its banks
under section 4 o f the B a n k H o ld in g C o m p a n y A ct, or to
any debt obligation w hich is an exempted security under
section 3 ( a ) ( 3 ) o f the Securities A c t o f 1933” (12 U S C
461 note).]

^
(i) No member bank shall, directly or indi­
rectly, by any device whatsoever, pay any in­
terest on any deposit which is payable on de­
mand: Provided, That nothing herein con­
tained shall be construed as prohibiting the
payment of interest in accordance with the
terms of any certificate of deposit or other
contract entered into in good faith which is in
force on the date on which the bank becomes
subject to the provisions of this paragraph;
but no such certificate of deposit or other con­
tract shall be renewed or extended unless it
shall be modified to conform to this para­
graph, and every member bank shall take such
action as may be necessary to conform to this
paragraph as soon as possible consistently
with its contractual obligations: Provided fur­



ther, That this paragraph shall not apply to
any deposit of such bank which is payable
only at an office thereof located outside of the
States of the United States and the District of
Columbia: Provided further, That until the ex­
piration of two years after the date of enact­
ment of the Banking Act of 1935 this para­
graph shall not apply (1) to any deposit made
by a savings bank as defined in section 12B of
this Act, as amended, or by a mutual savings
bank, or (2) to any deposit of public funds
made by or on behalf of any State, county,
school district, or other subdivision or munici­
pality, or to any deposit of trust funds if the
payment of interest with respect to such de­
posit of public funds or of trust funds is re­
quired by State law. So much of existing law
as requires the payment of interest with re­
spect to any funds deposited by the United
States, by any Territory, District, or posses­
sion thereof (including the Philippine Is­
lands), or by any public instrumentality,
agency, or officer of the foregoing, as is incon­
sistent with the provisions of this section as
amended, is hereby repealed.
[12 U S C 371a. A s added b y act o f June 16, 1933 (48 Stat.
181); and amended by acts o f A u g . 23, 1935 (49 Stat. 714);
Sept. 21, 1966 (80 Stat. 824) (a s amended by acts o f Sept.
21, 1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 85 6));
Dec. 28, 1979 (93 Stat. 1233); and M a r c h 31, 1980 (94
Stat. 145). T h e B a n k in g A c t o f 1935, referred to in this
paragraph, was approved A u g . 23, 1935. Section 12B was
withdraw n and enacted as a separate act o f Sept. 21, 1950;
for definition o f “savings b an k” under the act, see 12 U S C
1813 (g ). Presidential P roclam ation N o . 2695 o f July 4,
1946 (60 Stat. 1352; 12 U S C 1394 note) recognizes the
independence o f the Philippine Islands. Therefore the
words “ (in clu d ing the P hilippine Is la n d s )” have been
omitted from the U .S. Code.
Section 2 o f P u b lic L a w 93-100 o f A u g. 16, 1973 (12
U S C 1832) as amended by acts o f Feb. 27, 1976 (90 Stat.
197); N o v. 10, 1978 (92 Stat. 3712); Dec. 28, 1979 (93
Stat. 1235); M a r c h 31, 1980 (94 Stat. 146); and Oct. 15,
1982 (96 Stat. 1540) provides as follows:
“ ( a ) ( 1 ) N o tw ithstan d in g any other provision o f law but
subject to paragraph (2 ), a depository institution is
authorized to perm it the owner o f a deposit or account
on w hich interest or dividends are paid to m ake w ith­
draw als b y negotiable or transferable instruments for
the purpose o f m akin g transfers to third parties.
(2 ) P aragraph (1 ) shall apply only with respect to
deposits or accounts w hich consist solely o f funds in
w hich the entire beneficial interest is held by one or

17

Statutory Provisions
m ore individuals or by an organization w hich is oper­
ated prim arily for religious, philanthropic, charitable,
educational, or other sim ilar purposes and w hich is
not operated for profit, and with respect to deposits of
public funds by an officer, employee, or agent o f the
U nited States, any State, county, m unicipality, or po­
litical subdivision thereof, the D istric t o f Colum bia,
the Com m on w ealth o f Puerto R ico, A m erican Samoa,
G u am , any territory or possession o f the U nited
States, or any political subdivision thereof.
(b ) F o r purposes o f this section, the term “depository
institution” m eans—
(1 ) any insured bank as defined in section 3 o f the
Federal D eposit Insurance Act;
(2 ) any State bank as defined in section 3 o f the Fed ­
eral D ep osit Insurance Act;
(3 ) any m utual savings bank as defined in section 3 o f
the Federal D eposit Insurance A ct;
(4 ) any savings bank as defined in section 3 o f the
Federal D eposit Insurance Act;
(5 ) any insured institution as defined in section 401 o f
the N a tio n al H o u sin g A ct; and
(6 ) any build in g and loan association or savings and
loan association organized and operated according to
the law s o f the State in w hich it is chartered or orga­
nized; and, for purposes of this paragraph, the term
“State” m eans any State o f the U nited States, the D i s ­
trict o f Colum bia, any territory o f the U nited States,
Puerto R ico , G u am , A m erican Sam oa, or the V irg in
Islands.
(c ) A n y depository institution w hich violates this sec­
tion shall be fined $1,000 for each violation.” ]

(j) The Board may from time to time, after
consulting with the Board of Directors of the
Federal Deposit Insurance Corporation and
the Federal Home Loan Bank Board, pre­
scribe rules governing the payment and adver­
tisement of interest on deposits, including lim­
itations on the rates of interest which may be
paid by member banks on time and savings
deposits. The Board may prescribe different
rate limitations for different classes of depos­
its, for deposits of different amounts or with
different maturities or subject to different con­
ditions regarding withdrawal or repayment,
according to the nature or location of member
banks or their depositors, or according to
such other reasonable bases as the Board may
deem desirable in the public interest. No
member bank shall pay any time deposit be­
fore its maturity except upon such conditions
and in accordance with such rules and regula­
tions as may be prescribed by the said Board,
or waive any requirement of notice before
payment of any savings deposits except as to
all savings deposits having the same require­
ments: Provided, That the provisions of this
paragraph shall not apply to any deposit
which is payable only at an office of a member
18




Regulation Q

bank located outside of the States of the Unit­
ed States and the District of Columbia. Dur­
ing the period commencing on October 15,
1962, and ending on October 15, 1968, the
provisions of this paragraph shall not apply to
the rate of interest which may be paid by
member banks on time deposits of foreign
governments, monetary and financial authori­
ties of foreign governments when acting as
such, or international financial institutions of
which the United States is a member.
[12 U S C 371b. A s added by act o f June 16, 1933 (48 Stat.
182). A m en d ed by acts o f A u g. 23, 1935 (49 Stat. 714);
Oct. 15, 1962 (76 Stat. 953); July 21, 1965 (79 Stat. 244);
Sept. 21, 1966 (80 Stat. 824) (a s amended b y acts o f Sept.
21, 1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856),
Joint R esolu tion o f Sept. 22, 1969 (83 Stat. 115); A c t o f
Dec. 23, 1969 (83 Stat 371), Joint Resolution o f M a r c h 31,
1971 (85 Stat. 13); and act o f M a y 18, 1971 (85 Stat. 3 8 )),
Sept. 21, 1968 (82 Stat. 856); July 6, 1973 (87 Stat. 147);
A u g . 16, 1973 (87 Stat. 342); Oct. 28, 1974 (88 Stat.
1505); Dec. 31, 1975 (89 Stat. 1124); A p r il 19, 1977 (91
Stat. 49); and N o v . 16, 1977 (91 Stat. 1387).
Effective six years after M a r c h 31, 1980, this subsection
w ill be amended as follows. T h e first sentence w ill be
amended b y strikin g out “paym ent and ” and b y striking
out “, in clu d in g lim itations on the rates o f interest w hich
m ay be paid ”. The second sentence w ill be repealed. The
third sentence w ill be amended b y striking out “N o m em ­
ber b an k” and all that follow s through “Provided, That,
the” and inserting in lieu thereof “T h e” .]

DEPOSITORY INSTITUTIONS
DEREGULATION ACT
SECTION 202—Findings and Purpose
(a) The Congress hereby finds that—
(1) limitations on the interest rates which
are payable on deposits and accounts dis­
courage persons from saving money, create
inequities for depositors, impede the ability
of depository institutions to compete for
funds, and have not achieved their purpose
of providing an even flow of funds for home
mortgage lending; and
(2) all depositors, and particularly those
with modest savings, are entitled to receive
a market rate of return on their savings as
soon as it is economically feasible for depos­
itory institutions to pay such rate.
(b) It is the purpose of this title to provide
for the orderly phase-out and the ultimate

Regulation Q

elimination of the limitations on the maxi­
mum rates of interest and dividends which
may be paid on deposits and accounts by de­
pository institutions by extending the authori­
ty to impose such limitations for 6 years, sub­
ject to specific standards designed to ensure a
phase-out of such limitations to market rates
of interest.
[12 U S C 3501.]

SECTION 203—Establishment and
Authority of Committee
(a) The authorities conferred by section
19(j) of the Federal Reserve Act (12 U.S.C.
371b), section 18(g) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(g)), and sec­
tion 5B(a) of the Federal Home Loan Bank
Act (12 U.S.C. 1425b(a)) or by any other
provision of Federal law, other than section
117 of the Federal Credit Union Act (12
U.S.C. 1763), to prescribe rules governing the
payment of interest and dividends and the es­
tablishment of classes of deposits or accounts,
including limitations on the maximum rates of
interest and dividends which may be paid on
deposits and accounts, and the authority con­
ferred by the provisions of section 102 of Pub­
lic Law 94-200 (12 U.S.C. 461 note) are
hereby transferred to the Depository Institu­
tions Deregulation Committee (hereinafter in
this title referred to as the “Deregulation
Committee”).
(b) The Deregulation Committee shall con­
sist of the Secretary of the Treasury, the
Chairman of the Board of Governors of the
Federal Reserve System, the Chairman of the
Board of Directors of the Federal Deposit In­
surance Corporation, the Chairman of the
Federal Home Loan Bank Board, and the
Chairman of the National Credit Union Ad­
ministration Board, who shall be voting mem­
bers, and the Comptroller of the Currency
who shall be a nonvoting member of the De­
regulation Committee. The Deregulation
Committee shall hold public meetings at least
quarterly. All meetings of the Deregulation
Committee shall be conducted in conformity
with the provisions of section 552b of title 5,
United States Code. The Deregulation Com­



Statutory Provisions

mittee may not take any action unless
such action is approved by a majority vote
of the voting members of the Deregulation
Committee.
(c) The authorities conferred by this title on
the Deregulation Committee and its members
may not be delegated.
[12 U S C 3502. Section 3 2 6 (a) o f the G a m -S t G erm ain
D epository Institutions A c t o f 1982 (96 Stat. 1500) re­
pealed section 102 o f P u b lic L a w 94—200.]

SECTION 204— Directive to the
Committee
(a) The Deregulation Committee shall, by
regulation, exercise the authorities transferred
by section 203 to provide for the orderly
phase-out and the ultimate elimination of the
limitations on the maximum rates of interest
and dividends which may be paid on deposits
and accounts as rapidly as economic condi­
tions warrant. The phase-out of such limita­
tions may be achieved by the Deregulation
Committee by the gradual increase in such
limitations applicable to all existing categories
of accounts, the complete elimination of the
limitations applicable to particular categories
of accounts, the creation of new categories of
accounts not subject to limitations or with
limitations set at current market rates, any
combination of the above methods, or any
other method.
(b) The Deregulation Committee shall work
toward providing all depositors with a market
rate of return on their savings with due regard
for the safety and soundness of depository in­
stitutions. Pursuant to the authority granted
by this title, the Deregulation Committee
shall increase all limitations on the maximum
rates of interest and dividends which may be
paid on deposits and accounts to market rates
as soon as feasible, except that the Deregula­
tion Committee shall not increase such limita­
tions above market rates during the six-year
period beginning on the date of enactment of
this title.
(c ) (1) The Committee shall issue a regula­
tion authorizing a new deposit account, ef­
fective not later than 60 days after the date
19

Statutory Provisions

of enactment of this subsection. Such ac­
count shall be directly equivalent to and
competitive with money market mutual
funds registered with the Securities and Ex­
change Commission under the Investment
Company Act of 1940.
(2) No limitation on the maximum rate or
rates of interest payable on deposit accounts
shall apply to the account authorized by
this subsection.
(3) For purposes of section 19(b) of the
Federal Reserve Act, accounts established
pursuant to this subsection which are not
“transaction accounts” as defined by the re­
serve requirement regulations of the Board
of Governors of the Federal Reserve Sys­
tem as those regulations existed on August
1, 1982, shall not be subject to transaction
account reserves, even though no minimum
maturity is required, and even though up to
three preauthorized or automatic transfers
and three transfers to third parties are per­
mitted monthly.
(4) The transitional adjustment provisions
in section 19(b)(8) of the Federal Reserve
Act, providing for the phase-in of reserve
requirements, shall not apply to an account
or accounts established pursuant to this
subsection.
[12 U S C 3503. A s amended by acts o f Oct. 15, 1982 (96
Stat. 1501) and Jan. 12, 1983 (96 Stat. 2508). Section
3 2 6 ( b ) - ( d ) o f the G a m -S t G erm ain D epository In stitu ­
tions A c t o f 1982 (96 Stat. 1500) provides:

( b ) (1 ) Interest rate differentials for all categories o f de­
posits or accounts between (i) any bank (other than a
savings b a n k) the deposits of w hich are insured b y the
Federal D eposit Insurance Corporation, and (ii) any
savings and loan, build in g and loan, or homestead as­
sociation (in clu d in g cooperative b a n ks) the deposits
or accounts o f w hich are insured by the Federal Sa v ­
in gs and L o a n Insurance Corporation or any m utual
savings bank as defined in section 3 (f) o f the Federal
D eposit Insurance A c t (12 U .S.C . 1813 (j)), shall be
phased out on or before January 1, 1984.
(2 ) A n y differential w hich is being phased out pursu­
ant to a schedule established by regulations prescribed
by the D epository Institutions Deregulation C o m m it­
tee prior to the date o f enactment o f this A c t shall be
phased out as soon as practicable, but in no event later
than such schedule provides.
(3 ) N o tw ithstan d in g any other provision o f law, no
differential for any category o f deposits or accounts
shall be established or maintained on or after January
1, 1984.
(c ) N o interest rate differential m ay be established or
m aintained in the case o f the deposit account authorized

20



Regulation Q
pursuant to section 2 0 4(c) o f the Depository Institutions
Deregulation A c t o f 1980.
( d ) In the case o f the elim ination or reduction o f any
interest rate differential under subsection (b ) w ith re­
spect to any category o f deposits or accounts between
(1 ) any bank (other than a savings b an k) the deposits o f
w hich are insured by the Federal D eposit Insurance C o r ­
poration and (2 ) any savings and loan, bu ild in g and
loan, or homestead association (in clu d in g cooperative
b a n ks) the deposits or accounts o f w hich are insured by
the Federal Savings and L o a n Insurance C orporation or
any m utual savings bank as defined in section 3 ( f ) o f the
Federal D eposit Insurance A ct, the m ax im u m rate o f
interest w hich shall be established for such category of
deposits for banks (other than savings b a n ks) the depos­
its o f w hich are insured by the Federal D eposit In su r ­
ance C orporation shall be equal to the highest rate o f
interest w hich savings and loan associations the deposits
or accounts o f w hich are insured by the Federal Savin gs
and L o a n Insurance Corporation were permitted to pay
on such category o f deposits imm ediately prior to the
elim ination
or reduction
o f such
interest
rate
differential.]

SECTION 205—Targets
(a) In order to assist the Deregulation Com­
mittee in establishing the limitations on the
maximum rates of interest and dividends
which may be paid on all deposits and ac­
counts at market rates as soon as feasible and
in order to provide maximum assurance that
interest rate controls will be phased-out dur­
ing the 6-year period following the date of en­
actment of this title, the Deregulation Com­
mittee shall vote, not later than 18 months
after such date of enactment, on whether to
increase the limitations on the maximum rates
applicable to passbook and similar savings ac­
counts by at least one-fourth of one percent­
age point during such 18-month period, and
shall vote, not later than the end of each of the
third, fourth, fifth, and sixth years after such
date of enactment, on whether to increase the
limitations on the maximum rates applicable
to all categories of deposits and accounts by at
least one-half of one percentage point.
(b) The Deregulation Committee may, con­
sistent with the purposes of this title, adjust
the limitations on the rates applicable to all
categories of deposits and accounts to rates
which are higher or lower than the targets set
forth in this section.
[12 U S C 3504.]

Regulation Q

SECTION 206—Reports
Each member of the Deregulation Committee
shall separately report to the Congress annu­
ally after the date of enactment of this Act
regarding the economic viability of depository
institutions. Each such report shall contain—
(1) an assessment of whether the removal
of any differential between the rates payable
on deposits and accounts by banks and
those payable by thrift institutions will ad­
versely affect the housing finance market or
the viability of the thrift industry;
(2) recommendations for measures which
would encourage savings, provide for the
equitable treatment of small savers, and en­
sure a steady and adequate flow of funds to
thrift institutions and the housing market;
(3) findings concerning disintermediation
of savings deposits from insured banks and
insured thrift institutions to uninsured
money market innovators paying market
rates to savers; and
(4) recommendations for such legislative
and administrative actions as the member
involved considers necessary to maintain
the economic viability of depository
institutions.
[12 U S C 3505.]

SECTION 207—Terminations
(a) Section 7 of Public Law 89-597 (12
U.S.C. 461 note) is hereby repealed.
(b) Effective upon the expiration of 6 years
after the date of enactment of this Act—
(1) section 102 of Public Law 94-200 (12
U.S.C. 461 note) is hereby repealed;
(2) the second sentence of section
18(g)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1828(g)(1)) is amended by
striking out “payment and” and by striking
out “, including limitations on the rates of
interest and dividends that may be paid”;
(3) the third, fifth, and eighth sentences of
section 18(g)(1) of the Federal Deposit In­
surance Act (12 U.S.C. 1828(g)(1) are
hereby repealed;
(4) the first sentence of section 19(j) of the
Federal Reserve Act (12 U.S.C. 371b) is
amended by striking out “payment and”



Statutory Provisions

and by striking out “, including limitations
on the rates of interest which may be paid”;
(5) the second sentence of section 19(j) of
the Federal Reserve Act (12 U.S.C. 371b) is
hereby repealed;
(6) the third sentence of section 19(j) of
the Federal Reserve Act (12 U.S.C. 371b)
is amended by striking out “No member
bank” and all that follows through “
That, the” and inserting in lieu thereof
“The”;
(7) the first sentence of section 5B(a) of
the Federal Home Loan Bank Act (12
U.S.C. 1425b(a)) is amended by striking
out “payment and” and by striking out
“, including limitations on the rates of in­
terest or dividends on deposits, shares, or
withdrawable accounts that may be paid”;
(8) the second and fourth sentences of sec­
tion 5B(a) of the Federal Home Loan Bank
Act (12 U.S.C. 1425b(a)) are hereby
repealed;
(9) the third sentence of section 5B(a) of
the Federal Home Loan Bank Act (12
U.S.C. 1425b(a)) is amended by striking
out “, including specifically the authority”
and all that follows through “of that
authority”;
(10) section 117 of the Federal Credit Un­
ion Act (12 U.S.C. 1763) is amended by
striking out “, pursuant to such regulations
as may be issued by the Board,”;
(11) section 501(a)(2) of the Depository
Institutions Deregulation and Monetary
Control Act of 1980 is amended by striking
out “ (A )” and by striking out subpara­
graph (B);
(12) section 527 of the Depository Institu­
tions Deregulation and Monetary Control
Act of 1980 is amended by striking out
“, except as provided in section
501(a)(2)(B)”; and
(13) Public Law 93-123 (12 U.S.C. 371b
note) is hereby repealed.

ed,

Provid­

[12 U S C 3506.]

SECTION 208—Enforcement
(a) Compliance with the regulations issued
by the Deregulation Committee under this ti­
tle shall be enforced under—

21

Statutory Provisions

(1) section 8 of the Federal Deposit Insur­
ance Act (12 U.S.C. 1818), in the case of—
(A) national banks, by the Comptroller
of the Currency;
(B) member banks of the Federal Re­
serve System (other than national
banks), by the Board of Governors of the
Federal Reserve System;
(C) banks insured by the Federal De­
posit Insurance Corporation (other than
members of the Federal Reserve Sys­
tem), by the Board of Directors of the
Federal Deposit Insurance Corporation;
and
(2) section 5(d) of the Home Owners’
Loan Act of 1933 (12 U.S.C. 1464(d)),
section 407 of the National Housing Act
(12 U.S.C. 1730), and section 17 of the
Federal Home Loan Bank Act, by the Fed­
eral Home Loan Bank Board (acting di­
rectly or through the Federal Savings and
Loan Insurance Corporation), in the case
of any institution subject to any of those
provisions.
(b) For the purpose of the exercise by any
agency referred to in subsection (a) of its
powers under any Act referred to in that sub­
section, a violation of any regulation pre­
scribed under this title shall be deemed to be a
violation of a regulation prescribed under the

22



Regulation Q

Act involved. In addition to its powers under
any provision of law specifically referred to in
subsection (a), each of the agencies referred
to in such subsection may exercise, for the
purpose of enforcing compliance with any reg­
ulation prescribed under this title, any other
authority conferred on it by law.
[12 U S C 3507.]

SECTION 209—Transitional Provisions
All rules and regulations issued pursuant to
any authority transferred by section 203 of
this title shall remain in effect until repealed,
amended, or superseded by a regulation of the
Deregulation Committee.
[12 U S C 3508.]

SECTION 210—Termination of
Authority
Upon the expiration of six years after the date
of the enactment of this Act, all authorities
transferred to the Deregulation Committee by
this title shall cease to be effective and the De­
regulation Committee shall cease to exist.
[12 U S C 3509.]