Amendments to Regulation D - The Forgotten Regulation

I was reading the recent amendments to Reg D (Reserve Requirements of Depository Insititutions) the other day and I heard this thump!. It took me a second to realize that it was my head hitting the desk. It's not a particularly interesting Regulation, even by Regulation standards. Nonetheless, there are a couple of minor changes that will affect you.

About the Reg: Reg D seems to be a grab-bag kind of regulation. When someone comes up with a rule that doesn't fit nicely into another Reg, someone says - "just give it to Reg D, he doesn't have much to do". The Feds use the reporting requirements of Reg D to track the money supply, it details some restrictions related the sale of securities, sets the amount of money fiancial institutions must set aside (reserve requirements), and restricts the number and types of transfers and withdrawals from savings accounts.

Here's a Trivia Question: What makes a savings account different from a demand (checking) account? Both can pay interest, and both can be accessed with a check, debit card, etc. So how are they different? I'll bet your CEO doesn't know the answer - just for fun, ask him.

The answer appears right here -> While normally you allow your members to withdraw money upon demand from their savings account, by regulation you must reserve the right to require a seven day notice for a withdrawal from savings (it should be in your disclosure). Money in a checking account must be made available on demand. Also, the types and number of withdrawals that may be made from a savings account is limited. This is where one of the new Reg D revisions come into play: the final amendment increased from three to six the number of third party transfers or withdrawals that can be made from a savings account each month. Six, wow, six. Other amendments include interest on "excess balance deposits" held a Federal Reserve Banks.

What about reserve requirements? Chances are, you have enough cash in your vault to satisfy the requirement. All credit unions are required to file a periodic Reg D 2900 report that helps you determine your reserve requirement. Hey, what was that thud?

Here is a link to the revisions: http://www.federalreserve.gov/newsevents/press/monetary/20090520b.htm