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Fed's interim final rule on Reg D provides flexibility for CUs
Last month, the Federal Reserve published an interim final rule to lower reserve ratios on transaction accounts maintained at depository institutions to zero percent, providing flexibility to credit unions under the Regulation D limit. NAFCU sent members a Final Regulation Alert yesterday with important updates on this issue and reminded credit unions that they can submit comments on the rule to the Fed until May 26.
Although Regulation D’s transfer limit has not been eliminated, credit unions may elect to reclassify savings accounts as transaction accounts without incurring new reserve requirements. However, this election must be consistent with how the credit union reports the accounts on its call reports.
Credit unions can continue to use their discretion on whether to classify each account as transaction or non-transaction accounts, but should be aware that the account designation could impact funds availability requirements under Regulation CC. This change does not amend the Regulation D transfer limit of six transfers or withdrawals per month.
Prior to the Fed's interim final rule, NAFCU President and CEO Dan Berger urged the Federal Reserve Board to consider removing the limit imposed by Regulation D on consumers' ability to freely transfer money between savings and transaction accounts. Berger pointed to the coronavirus as a reason for the board to take such a proactive measure.
Read more on this topic in this Compliance Blog. NAFCU will continue to advocate for the Fed to reform Regulation D so it better reflects modern monetary policy.