Deposit Account Regulations - 2 - Regulation D Reserve Requirements of Depository Institutions

Question 1

Describe the three ways Regulation D can affect your credit union.

Answer 1

May require maintaining reserve accounts, may affect how you define certain characteristics of deposit accounts and requires you to impose certain penalties for early withdrawal from time deposit accounts. (Page 2-2)

Question 2

What accounts are the primary focus of Regulation D?

Answer 2

Focuses primarily on transaction accounts. (Page 2-2)

Question 3

List the three types of accounts that may generate reserve requirements.

Answer 3

Transaction accounts, nonpersonal time deposits, and Eurocurrency deposits. (Page 2-5)

Question 4

What are the three ways in which reserves may be held?

Answer 4

Vault cash, a balance maintained directly with a Federal Reserve Bank, or a pass-through account. (Page 2-6)

Question 5

Why is it important to abide by the six-transfer limit set for savings accounts if required by the credit union?

Answer 5

If a depository institution suspends enforcement of the six-transfer limit on a “savings deposit,” the depository institution may report that account as a “transaction account” on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a “savings deposit.” (Page 2-7)

Question 6

Under Regulation D, what account transactions are excluded from the six-transfer limit for savings deposit accounts?

Answer 6

Transfers for loan payments at the same credit union, transfers, or withdrawals among accounts of the same person when made by mail, messenger, ATM, in
person, or telephone withdrawals resulting in a check mailed to the member. (Page 2-8)

Question 7

What is the minimum early withdrawal penalty required by Regulation D? Can this penalty ever be deducted from the principal balance?

Answer 7

At least seven days interest for early withdrawal from a time deposit in the first six days of the account. For nonpersonal time deposits with a maturity of 1½ years or more, at least one month’s interest. (Page 2-9)

When a penalty must be imposed and the account earnings are less than the amount of the penalty, the principal can be invaded. (Page 2-9)