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I’m trying to understand the recent Reg D changes to savings accounts in relationship to Reg CC. It seems the FRB has only addressed half the issue in its FAQ. Historically, Savings Accounts have not been subject to Reg CC. But if institutions remove the 6 excessive transfer limit and remove the right to require 7 days notice before withdrawal (but keeps the account title as “savings”) does that now make that product subject to Reg CC and funds availability notices? (One vendor is promoting that.)
I’m not understanding the change to the Reg D definition of “transaction accounts” {1002.2(e)(4)} and the Reg CC relationship:
Reg D
(4) Deposits or accounts on which the depository institution has reserved the right to require at least seven days’ written notice prior to withdrawal or transfer of any funds in the account and under the terms of which, or by practice of the depository institution, the depositor is permitted or authorized to make withdrawals for the purposes of transferring funds to another account of the depositor at the same institution (including transaction account) or for making payment to a third party, regardless of the number of such transfers and withdrawals and regardless of the manner in which such transfers and withdrawals are made.
Reg CC – 229.2(a)(1)
1) Except as provided in paragraphs (a)(2) and (a)(3) of this section, account means a deposit as defined in 12 CFR 204.2(a)(1)(i) that is a transaction account as described in 12 CFR 204.2(e). As defined in these sections, account generally includes accounts at a bank from which the account holder is permitted to make transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, electronic payment, or other similar means for the purpose of making payments or transfers to third persons or others. Account also includes accounts at a bank from which the account holder may make third party payments at an ATM, remote service unit, or other electronic device, including by debit card, but the term does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers.I think this is certainly something we’ll all be considering until we have clarification from the regulators. I don’t know what the regulators intentions are on this but they did not mention any effect of this change on Regulation CC holds in the interim final rule; however, we all know that doesn’t necessarily mean anything. So maybe they just didn’t think of that when they amended Reg D/might get to it later… I have contacted two inviduals at the FRB for clarification but haven’t heard anything yet. I will post here when I get a response.
Here’s my thinking right now, but I’m certainly not insisting this is correct and I’d like to others’ thoughts. Since savings accounts are still carved out of the definition of account for holds under Reg CC (language below… exclusion of savings account as defined under Reg D still in Reg CC definition and definition of savings under Reg D has been updated) I’m leaning toward it still doesn’t apply if it meets the definition of savings deposit under Reg D. Again, I’m not saying this is correct just my thoughts at this time. See q&a #4 below from the Fed… perhaps it will come down to how the bank classifies the account. ?? I will post here any information I receive from the Fed. Please do the same if you get any info. Thanks!
Reg CC definition of account:
(a) Account.
(1) Except as provided in paragraphs (a)(2) and (a)(3) of this section, account means a deposit as defined in 12 CFR 204.2(a)(1)(i) that is a transaction account as described in 12 CFR 204.2(e). As defined in these sections, account generally includes accounts at a bank from which the account holder is permitted to make transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, electronic payment, or other similar means for the purpose of making payments or transfers to third persons or others. Account also includes accounts at a bank from which the account holder may make third party payments at an ATM, remote service unit, or other electronic device, including by debit card, but the term does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers. An account may be in the form of–
(i) A demand deposit account,
(ii) A negotiable order of withdrawal account,
(iii) A share draft account,
(iv) An automatic transfer account, or
(v) Any other transaction account described in 12 CFR 204.2(e).
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Reg D definition of savings deposit:
(d)(1) Savings deposit means a deposit or account with respect to which the depositor is not required by the deposit contract but may at any time be required by the depository institution to give written notice of an intended withdrawal not less than seven days before withdrawal is made, and that is not payable on a specified date or at the expiration of a specified time after the date of deposit. The term savings deposit includes a regular share account at a credit union and a regular account at a savings and loan association.
Revised 4/24/20:
2) The term “savings deposit” also means: a deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements in paragraph (d)(1) of this section and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor may be permitted or authorized to make transfers and withdrawals to another account (including a transaction account) of the depositor at the same institution or to a third party, regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made.
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FAQ #4 states: https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm
May depository institutions continue to report accounts as “savings deposits” on their FR 2900 reports even after they suspend enforcement of the six-transfer limit on those accounts?
Yes. Depository institutions may continue to report these accounts as “savings deposits” on their FR 2900 reports after they suspend enforcement of the six-transfer limit on those accounts.The FRB has updated its Reg D FAQs to address Reg CC applicablity to savings accounts: https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm. See #13.
13. How did the recent amendments to Reg D impact Reg CC?
On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six per month limit on convenient transfers from “savings deposits.” Among other things, the interim final rule amended the definition of “transaction account” in 12 CFR 204.2(e) such that the definition now includes accounts described in 204.2(d)(2) (savings deposits).Regulation CC provides that an “account” subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC “account” definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC.
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