I am cleaning up our Reg O procedures and wanted clarification on section 215.4(e). It has always confused me.

For executive officers and directors, are we allowed to pay an overdraft, regardless of the amount? How does the "less than $1,000" apply?
We always charge a fee.

In reality, all our Reg O overdrafts are inadvertent (i.e. forgot to transfer), and the account would never be overdrawn for more than five days, since we identify and resolve them very quickly.

IT's not a violation of Reg. O if it is less than $1,000, clears in 5 days or less and a fee is charged. If it's over $1,000 it is a violation even if a fee is charged.

So, if we had an OD in the past year that was over $1,000, charged a fee, and cleared the same day, we have a Reg O violation?

What do you mean cleared the same day? Before your return deadline?

On a few occasions, the account holder was able to transfer funds before the return deadline.

If we can't contact them in time, we have paid the item over $1,000, causing an overdraft. This scenario would be a Reg O violation, correct?

Yes.

Dan P - This FRB letter is nice to have in my files, even if it was back in 1996.

Thanks!

Mel, we can thank Randy for that letter. I saved that link from one of his posts several years ago.

I was searching for it too. I had saved it, but due to my unique filing system (nothing matches), couldn't find it right away. Thanks Randy and Dan.