I agree with Randy that neither the change in terms rules (1005.8) of Reg E nor the subsequent disclosure requirements (1030.8) of Regulation DD are triggered by this change as the customers don't adversely affect the customer (nor do they change the APY). In other words, you don't need to contact existing customers under Reg DD or Reg E. That said, if you are permanently moving away from these requirements, you will want to update your disclosures for new customers to accurately reflect your new practices.

That was the point, Randy. REMOVING this requirement would not trigger disclosure change notices as it is not changing the APY nor is it adversely affecting the consumer nor it is restricting activity on transfers. But these are the only POSSIBLE notice requirements that would exist if they have included these in their disclosures. They may also wish to remove these restrictions from their disclosures if they are included and are no longer going to be effective.

There are other things to think about as they are making the decision concerning whether or not they will monitor or alter these requirements in their respective financial institutions. They also need to remember other disclosures that may contain this information and notify according to the requirements of those regulations based on the their decisions. If they continue to monitor - no change, if they remove the requirement or alter the requirement - they must change these disclosures and possibly notify under these regs. if they are altering.

waldensouth - I misunderstand your statement then:

If you have disclosed these limitations in your TISA disclosure, your Reg. E disclosure, etc. then you need to follow the change notice rules for those regulations.

Since the change is to the customer's benefit (more frequent withdrawals permitted), Reg DD and Reg E subsequent disclosure requirements are not triggered. Any change notice would be a customer service decision.

If we change our Reg CC disclosure to include savings accounts, this would trigger a subsequent disclosure since Reg CC requires a notice of change in funds availability 30 days after the change if it is to the customer's benefit.

We are not changing our disclosures right now. We are not charging an excessive transaction fee for the time being and will revisit in a few months. We have no intention of offering a FREE savings or MMDA, so I'm sure it will be an interesting discussion when we meet to discuss how to price these products.

As noted in the Fed's Federal Register document that accompanied the April 24 publication of the interim final rule, the change in definitions affects Call Reports. It may be just the instructions that will have to be changed, or there may be something more. The Fed said that the FFIEC agencies will announce any changes in a separate FR publication. I would not do any messing around with how you code these accounts until you see what the Q2 Call Report instructions require.

As to the discussion earlier about any impact on the definition of "account" in Reg CC, remember that the April 24 Reg D amendments changed the definition of "transaction account," too. I think for now you can rely on the wording of the Reg CC "account" definition in 12 CFR 229.2(a), but my guess is that may become a concern somewhere down the road if your savings accounts don't by then have some form of transfer/withdrawal limits.

John...after reading BOTH new definitions in Reg D for Savings deposit and Transaction account....204(d)(1) and (d)(2)...alongside 204(e)....it is not clear to me what actually is the distinguishing feature between the two types of accounts now...
with the rewording of 204(e)(4) aren't savings accounts transaction accounts by definition now?

I'm asking for purposes of Reg CC....whether we decide to continue limiting withdrawals or not....wouldn't savings accounts now be subject to Reg CC based on 204(e)(4)? I'm so confused....

Read the new definition of "transaction account" in Reg D 204.2(e)(4). If you limit savings transfer/withdrawals, they aren't transaction accounts, and Reg CC's "account" definition won't fit.

So I just want to clarify that I am understanding all of this correctly. If we decide to permanently remove the transfer/withdrawal limitations, then our savings accounts would be considered "transaction accounts" whether we list them on the call report as transaction accounts or not? I'm trying to understand how Reg CC will come into play. I just read an article on the Reg D rule and this is what is said:

"The six-transfer limit has been one of two distinguishing features between a transaction account (typically, a checking account) and a savings deposit (a savings account). The other feature that has traditionally distinguished savings accounts from checking accounts is the requirement that financial institutions reserve the right to require seven days’ notice prior to withdrawal from a savings account. The seven-day notice requirement is not being eliminated as a result of this rulemaking. However, the definition of “transaction account” is being expanded to include accounts with the seven-day notice limitation. To put it simply, instead of three unique types of accounts (transaction, savings, and time accounts) there are now only two unique types of accounts (transaction and time accounts) as savings deposits are now a subset of transaction accounts. The interim final rule does not include a sunset date – a date where the old definitions return. As a result, these definitional changes are permanent and can only be changed by subsequent rulemaking."

"Many financial institutions already apply their funds availability policy to their savings accounts so there is not an action item here for those financial institutions. However, for financial institutions that have not previously extended their funds availability policy to savings accounts, it appears that the policy now applies by action of law. These institutions should review their account opening processes to determine whether savings account customers/members were given the financial institution’s funds availability policy at account opening and, if none was provided, deliver one to those customers/members. Also, given the July 1, 2020 Regulation CC amendments, financial institutions may want to review, and expand as needed, the list of who gets sent the Regulation CC change notices. Financial institutions should look for the FRB to provide additional guidance on this potentially complex issue."[i][/i]

I was first under the impression that Reg CC would not apply unless we made the decision to list these accounts as "transaction accounts" on our call report. But now reading the above, it seems to say that because of the changes made, Reg CC now applies by "action of law". Am I reading this correctly? We plan to meet on this new rule in the next few days and I just want to make sure I am understanding everything correctly so I don't pass on any wrong information.

Thanks!

Well, the Federal Reserve has said that you are permitted to continue to report your savings accounts as "savings deposits" even if you suspend enforcing the 6 transaction limits If you do continue to report such accounts as savings accounts, I don't believe that Reg CC is going to apply. However, if you choose to report your savings accounts as "transaction accounts" going forward, Reg CC would absolutely apply.

That's exactly how I understood it from the beginning, Adam. Until I read this article today - then I was confused all over again. I'm going to stick with what the FRB has stated in their FAQ's for now and go from there.

204 (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.

John....to me this means it doesn't matter whether you put limitations on the withdrawals or not.....I'm not seeing that if we put limits on withdrawals it is NOT a transaction account....to me this says regardless of limitations it IS a transaction account....

So I'm still not seeing what the difference between a savings and a deposit account is now....

Please help me see what I am not understanding....

It won't let me edit...that was supposed to be 204.2(e)(4)

Bankwoman1 - Where is that article from?

The thing I am looking at is that Reg CC hasn't been changed (at least not yet). 229.2(a)(1) (the definition of an account) still includes this: "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."

204.2(d)(2) still references "savings deposits." While there isn't as much a difference between a "savings deposit" and a "transaction account," Reg D still contains separate definitions and Reg CC still excludes "savings deposits" as described in 204.2(d)(2).

I think this topic would make a great point to include in a comment letter looking for clarification.

Adam - it was an article that was sent to me from our forms vendor and was written by their principal attorney. Below is the link - I hope it is ok to include it here.

http://www.wolterskluwerfs.com/arti...15104&elqat=1&elqCampaignId=7857

I have to disagree with the article because of this statement in the definition of account in Reg CC: "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"

Yes - but the article is saying that "transaction accounts" are being expanded to include accounts with the 7 day notice limitation. So, with the withdrawal/transfer limitations being removed and 7 day notice limitation pertaining to "transaction accounts" now also (according to this article), is there really a savings deposit account? I mean you can call it a savings deposit account if you want - but I take this article as saying it is still considered a transaction account.

It's all very confusing......

New Reg D: every account is a transaction account except a time deposit. However, savings deposits can be both savings deposits and transaction accounts, and the institution can choose to report them either way. What qualifies an account as a savings deposit? The only distinction left is the 7 day notice limitation. If the account doesn't have that (and is not a time deposit), then it's a transaction account only. If the account does have that, classify it either way.

Reg. CC: Account includes transaction accounts as described in 204.2(e), but does not include savings deposits described in 204.2(d)(2). So a savings deposit (an account that has the 7 day notice limitation) is not subject to Reg. CC funds availability irrespective of transfer limitations (or lack thereof).

Yes Rainman but the 7 day notice limitation IS in the transaction account definition too...

204.2(e)(2) 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 that are subject to check, draft, negotiable order of withdrawal, share draft, or other similar item, including accounts described in paragraph (d)(2) of this section (savings deposits) and including accounts authorized by 12 U.S.C. 1832(a) (NOW accounts).

So I'm confused....

I don't understand your point - all accounts are transaction accounts except time deposits - see 204.2(e)(6). All savings deposits are also transaction accounts - they fall under both definitions. That's why the FRB says that the FI can choose how to report savings deposits - either as savings deposits or as transaction accounts. But not all transaction accounts are savings deposits. The only thing (now) that makes an account a savings deposit is the 7 day limitation - 204.2(d)(1). So a checking account that does not contain the 7 day notice limitation can only be classified as a transaction account; it can't be classified as a savings deposit.

Or to put it another way, 204.2(e)(2) isn't saying that all accounts with a 7 day notice are transaction accounts; it's saying that all accounts that are accessible by check/draft etc. AND have a 7 day notice are transaction accounts.

ahou and rainman, that is exactly my thinking. Since 229.2(a)(1) of Reg CC still specifically exempts "savings deposits" as defined in 204.2(d)(2) of Regulation D, and Regulation D 204.2(d)(2) still exists (and still separately defines a "savings deposit"), it appears to me that if 1) the product complies with the requirements in 204.2(d)(2) to be a savings deposit and 2) an institution continues to report them as a savings deposit, then these products won't apply to Reg CC at this time.

In other words, as long as you don't change your product terms and don't reclassify your savings accounts as "transaction accounts" on applicable reports (i.e. Call report, FR 2900 series, FR Y-9, ect), then I don't believe Subpart B of Reg CC (which covers holds) is going to apply.

Rainman...I laughed when I read your comment...I'm not surprised you don't understand my point...I really am confused by this...it is going in too many circles for me to follow....I'm getting lost in all the loops to the different definitions...

Thank you to you and Adam...I'm trying to follow those trains of thoughts....but will admit the light still hasn't come on for me...

I completely understand, Compliance504. I like to see things multiple ways, so let me try saying this a bit differently...

To start, the question here is whether Regulation CC is now going to apply to savings accounts.

To answer this, we must look at what Regulation CC applies to. The answer to this comes inside the definition of an "account", as found in the definitions section of Reg CC (229.2) because all of the hold rules specifically apply to "an account". An account is defined in Reg CC as "a deposit...that is a transaction account as described in 204.2(e)", (which of course is a reference to the definitions section of Regulation D). But we can't stop here, because the definition of an account in Reg CC also SPECIFICALLY says that an "account" "does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers."

So, when we go to the revised Reg D that describes a "savings deposit" (which is 204.2(d)(2) as referenced above), we see that the term "savings deposit" still includes "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."

While a "savings deposit" is now considered a type of transaction account under Reg D, Reg CC still specifically excludes savings deposits from the definition of an account, which therefore still excludes these accounts from Reg CC hold requirements.

To recap, Regulation CC still does not apply to a "savings deposit" even though a "savings deposit" is also now considered a transaction account. To me, it is sort of like saying that Reg CC applies to all types of fruit, except it doesn't apply to apples because even though apples are a type of fruit, they are also specifically excluded. (And yes, this isn't really an apples to apples comparison. )