ABA Flags Issues Around Fed’s Reg D Changes

The American Bankers Association today expressed support for the Federal Reserve’s removal of the six-per-month limit on transfers or withdrawals from savings deposit accounts under Regulation D while also raising concerns about the blurring of distinctions between such accounts and transaction accounts. The Fed announced the change in an interim final rule in April, noting that a recent action reducing all reserve requirement ratios to zero has eliminated the need to distinguish between reservable “transaction accounts” and non-reservable “savings deposits.”

“Changing Regulation D by consolidating definitions, without prior modification of the rules that rely on the granularity of the definitions, has caused confusion and likely creates unintended policy changes,” ABA wrote in a comment letter. “[W]e would support consideration of whether or not Regulation D is itself necessary or in need of modernization. Until the Federal Reserve has finalized any changes to relevant regulations, we urge it to maintain a distinction between savings deposits and transaction accounts.”

Specifically, the association urged the Fed to establish a definition of “savings deposit” for regulatory and reporting purposes; work with the Federal Financial Institutions Examination Council to modify the Call Report as needed; review the necessity of the FR 2900, a report used for the calculation of required reserves; and allow for a sufficient transition period if the Federal Reserve decides that a return to required reserves is needed.