Deposit Archive

The Federal Reserve Board has announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2008.

The Federal Reserve Board has published a proposal to amend Regulation DD, which implements the Truth in Savings Act, and the staff commentary to the regulation, to provide additional disclosures about account terms and costs associated with overdrafts.

The proposed amendments would set forth content and timing requirements for a notice to consumers about any right to opt out of an institution's overdraft service. Requirements for disclosing overdraft fees on periodic statements would be expanded to apply to all institutions and not solely to institutions that promote the payment of overdrafts. The proposed amendments also address balance disclosures provided in response to balance inquiries from consumers.

Comments on this proposal must be received on or before July 18, 2008.

The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The Federal Reserve Board has announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

In a press release, the Federal Trade Commission has announced that it has issued its annual report to the Federal Reserve Board on FTC enforcement activities in 2007 related to the Truth in Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Electronic Fund Transfer Act.

In a press release, the Federal Reserve Board announced the release of its 2007 study of noncash payments which revealed that in 2006 more than two-thirds of all U.S noncash payments were made electronically.  From 2003 to 2006, the period covered by the study, all types of electronic payments grew while check payments decreased.  The Federal Reserve’s 2004 Payments Study found that the number of electronic payments and check payments were roughly equal in 2003.

The Federal Reserve Board has announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

The Department of the Treasury and the Federal Reserve Board issued a press release announcing the release of a joint proposed rule to implement the Unlawful Internet Gambling Enforcement Act (the Act). The Act prohibits gambling businesses from accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.

National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood delivered a speech recently at the Credit Union National Association (CUNA) Payment Systems Conference.  In his speech, Hood promoted the best practices of enterprise wide risk management and concentrated on the evolving payment systems, remote deposit capture, money service businesses and emerging retail payments.

The FRB has published its final rule amending Regulation E, which implements the Electronic Fund Transfer Act, and the official staff commentary to the regulation. Regulation E requires that financial institutions make a receipt available at the time a consumer initiates an electronic fund transfer (EFT) at an electronic terminal. The final rule creates an exception from this requirement for EFTs of $15 or less. The final rule is effective August 6, 2007.

The Federal Reserve Board is amending appendix A of Regulation CC to delete the reference to the Windsor Locks office of the Federal Reserve Bank of Boston and to reassign the Federal Reserve
routing symbols currently listed under that office to the head office of the Federal Reserve Bank of Philadelphia. These amendments reflect the restructuring of check-processing operations within the Federal Reserve System.

The final rule will become effective on September 20, 2008.

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Sixth and Eighth Districts, and provided notice relating to future changes to Appendix A.

On January 8, 2008, the Federal Reserve Board announced that it was once again consolidating check processing regions and that by the first quarter of 2011 there would be only four check processing regions remaining. On March 31, 2008, the Board announced a revised schedule and plans to consolidate to four check processing regions by early 2010 instead (a year earlier than previously announced). The four remaining sites will be the head offices for the Federal Reserve Banks of Atlanta, Cleveland, Dallas, and Philadelphia. Here is the revised schedule.

For a discussion of the impact that moving to four check processing regions will have on disclosures, see the January 23, 2008, article by Karl Leslie.

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Tenth and Eleventh Districts.

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the check processing operations of the Federal Reserve Banks of New York, Philadelphia, and Cleveland, and provided notice relating to future changes to Appendix A.

In a press release, the Federal Reserve announces that its 2007 study of the composition of the check market shows that nearly 50 percent of checks written are consumer-to-business checks. The Check Sample Study reports on the composition of the check market based on responses from nine large financial institutions that together account for about one quarter of total U.S. paid check volume. The study, which categorizes the use of checks by payer, payee, and purpose, is the third component of the 2007 Federal Reserve Payments Study. Results of the first two components of the study were released December 10, 2007.

In a press release, the FDIC Chairman Bair has said that the FDIC has a promise to keep to the nation's bank customers.  That promise is spelled out in the Depositor Bill of Rights.

Our FDIC Insurance Brochures are designed to provide guidance to your depositors regarding account ownership, investment options, and living trusts.

The FDIC has published two rules in the July 17, 2008 Federal Register that address precautions in the event an institution should fail. 

A final rule would require the largest insured depository institutions to adopt mechanisms that would, in the event of the institution's failure: provide the FDIC with standard deposit account and other customer information; and allow the placement and release of holds on liability accounts, including deposits.

An interim rule establishes the FDIC's practices for determining deposit and other liability account balances at a failed insured depository institution.

The NCUA has issued a proposal revising the requirements for use of the official insurance sign and official advertising statement to permit insured credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements.

The proposed rule will give credit unions added flexibility in advertisements. As compared to the current requirement, credit unions will be able to use the shortened form or the official insurance sign in advertisements as alternatives to the basic official advertising statement; under the current rule, credit unions may only use the shortened form if they also include the official sign.

Comments on this proposal must be received on or before June 27, 2008.

The FDIC has published two rules in the federal register.  The first is an interim rule that addresses deposit insurance requirements after certain conversions and the definition of “corporate reorganization” among other things.  The interim rule is effective January 14, 2008 and comments on the rule must be received by March 14, 2008.

The second is a notice of proposed rulemaking that contains two parts. The first part would establish the FDIC's practice for determining deposit account balances at a failed insured depository institution. The second part would require the largest insured depository institutions to adopt mechanisms that would, in the event of the institution's failure: provide the FDIC with standard deposit account and customer information; and allow the FDIC to place and release holds on liability accounts, including deposits. Comments on this proposal must be submitted on or before April 14, 2008.

Final rules revising the FDIC and the NCUA regulations regarding official signs and advertising of membership will become effective in November. 

The FDIC final rule replaces the separate signs used by Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF) members with a new sign, or insurance logo, to be used by all insured depository institutions. In addition, the final rule extends the advertising requirements to savings associations, consolidates the exceptions to those requirements, and restricts the use of the official advertising statement when advertising non-deposit products. The final rule will become effective on November 13, 2007.

The NCUA final rule required credit unions to replace the old version of the official sign with the revised official sign at required locations such as each station or window where the credit union normally receives insured funds or deposits in its principal place of business and all of its branches and on its internet page where it accepts deposits or opens accounts by May 22, 2007. Credit unions must replace the old version of the official sign with the
revised official sign on each document where it has chosen to include the official sign, including advertisements, marketing and promotional
materials, disclosures, and others by November 23, 2007. 

See our insurance brochures for how to explain federal policies governing insured deposits/accounts and provide guidance to your depositors regarding account ownership, investment options, and living trusts.

The IRS has reposted the W-9. The form has an IRS revision date of 10/2007.  This revision makes corrections to the W-9 instructions, the form itself was unchanged.

The September 2007 revision of Form W-9, Request for Taxpayer Identification Number and Certification, has been temporarily removed from the IRS web site.  A necessary correction to the instructions was recently discovered. The previously posted version should not be used. It is anticipated that the corrected version will be available no later than Monday, October 22.

The IRS has posted a revised W-9 form (VMP9030) on their website. The form has a revision date of September, 2007. The changes to form include a new checkbox on page 1 for Limited Liability Company along with a space to enter a tax classification for the LLC. Page 1 also has some changes in the instructions section, page 2 has a change to the instructions for LLCs, and finally a new section, entitled Secure Your Tax Records from Identity Theft, was added to page 4. A fillable pdf can be found on the IRS’s website.  The VMP9030 will be scheduled for a completion date of December 1, 2007.

In a meeting with compliance examiners, the Comptroller of the Currency John C. Dugan stated that the OCC must continue to focus on consumer compliance while it deals with the credit quality problems that are now confronting the industry.  According to Dugan, "We simply cannot take our eyes off compliance while we address safety and soundness.  We know how to deal with credit issues, and we will work our way through these very difficult problems. What I don't want, though, is to finish dealing with the industry’s safety and soundness issues only to find that we've allowed significant compliance problems to develop in their place."

The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The OCC has entered into a settlement agreement with Wachovia Bank, National Association that directs the bank to make restitution to consumers harmed by its relationships with several telemarketers and third party payment processors.

According to the OCC’s press release, the bank has agreed to make restitution to all consumers harmed who have not been previously reimbursed and who file claims under the processes set out in the settlement. The estimated maximum amount of potential claims is $125 million; actual claims may result in restitution in a lesser amount. In addition to the restitution payments, the bank will also be required to contribute approximately $8.9 million to consumer education programs directed at the elderly, and to pay a $10 million civil money penalty to the U.S. Treasury. In reaching the settlement,  the OCC concluded that the bank engaged in unsafe or unsound practices during the course of its relationships with the payment processors and telemarketers, and unfair practices within the meaning of the Federal Trade Commission Act.

The U.S. Treasury Department has  released its Blueprint for an improved financial regulatory structure.  This structure is designed to  strengthen consumer protections, improve tools for market stability and enhance financial innovation. Treasury's Blueprint for a Modernized Financial Regulatory Structure also presents a series of short-, intermediate- and long-term recommendations for reform of the U.S. regulatory structure.

In a press release, the Federal Reserve announces that its 2007 study of the composition of the check market shows that nearly 50 percent of checks written are consumer-to-business checks. The Check Sample Study reports on the composition of the check market based on responses from nine large financial institutions that together account for about one quarter of total U.S. paid check volume. The study, which categorizes the use of checks by payer, payee, and purpose, is the third component of the 2007 Federal Reserve Payments Study. Results of the first two components of the study were released December 10, 2007.

In a press release, the FTC announced that an operation marketing Visa- and MasterCard-branded prepaid debit cards to subprime consumers has agreed to settle Federal Trade Commission charges that it made unauthorized debits from consumers’ bank accounts and engaged in deceptive marketing practices.

The OCC has issued a press release reminding consumers to read the terms and conditions when you receive or purchase gift cards this holiday season. Gift cards can have expiration dates, fees, and other terms that can reduce their value. Other terms may limit where cards can be used or explain handling complaints and lost or stolen cards.

The Agencies are proposing guidance entitled Garnishment of
Exempt Federal Benefit Funds. This proposed guidance has been developed
to encourage financial institutions to have policies and procedures in
place with respect to handling garnishment orders and sets forth best
practices, including procedures designed to expedite notice to the
consumer of the garnishment process and release of funds to the
consumer as quickly as possible.

In a press release, the SEC and FRB have announced the adoption of final joint rules to implement the “broker” exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934.  These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act).  The rules define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and implement the most important “broker” exceptions for banks adopted by the GLB Act. The rules are designed to accommodate the business practices of banks and to protect investors.  In developing these rules, the agencies consulted extensively with the OCC, the FDIC and the OTS.  Banks do not have to start complying with the rules until the first day of their fiscal year commencing after September 30, 2008.

The Federal Financial Institutions Examination Council (FFIEC) has issued updated guidance for examiners, financial institutions, and technology service providers to identify business continuity risks and evaluate controls and risk management practices for effective business continuity planning. The guidance is an update to the “Business Continuity Planning Booklet,” which was issued in March 2003.

There is some uncertainty as to the effective date of this Visa rule change. On February 25, 2008, one of our customers sent us an official Visa Business Review dated June of 2007. That document clearly indicates an April 25th effective date. However, we have recently seen materials from several card processors, as well as an email from Visa support sent to one of our customers, now indicating an April 4th effective date for BASE I institutions and April 5 for BASE II institutions. Still other card processors have indicated an April 1st effective date. Wolters Kluwer Financial Services is not a member of Visa and as a result does not have direct access to the Visa rules. We recommend that financial institutions work directly with their card processor to determine the date their card processor is going to go live with the ISA changes. Financial institutions can then make plans based on that date. It may be that an institution will need to absorb the Visa ISA until the 21 day change notice can be satisfied. As always, we recommend involving your legal counsel and compliance personnel in making these decisions.

For more information on the VISA changes, see Karl Leslie's article Visa® USA Changes International Service Assessment.

In a press release, the Federal Reserve announces it has issued the first new $5 bill. The new $5 bill incorporates state-of-the-art security features that are easy to use by cash handlers and consumers alike.

In a press release, the FTC announced that an operation marketing Visa- and MasterCard-branded prepaid debit cards to subprime consumers has agreed to settle Federal Trade Commission charges that it made unauthorized debits from consumers’ bank accounts and engaged in deceptive marketing practices.

The Federal Financial Institutions Examination Council (FFIEC) has issued guidance for financial institutions in identifying the continuity planning that should be in place to minimize the potential adverse effects of a pandemic. This guidance expands upon the contents of the Interagency Advisory on Influenza Pandemic Preparedness issued in March 2006.

The OCC has issued a press release reminding consumers to read the terms and conditions when you receive or purchase gift cards this holiday season. Gift cards can have expiration dates, fees, and other terms that can reduce their value. Other terms may limit where cards can be used or explain handling complaints and lost or stolen cards.

The U.S. government has digitally unveiled a new, more secure design for the $5 bill that will be issued and enter circulation in early 2008.  A new $100 bill will follow. This is the first time in history that U.S. paper money has ever been unveiled entirely online.

For more information, click here.

National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood delivered a speech recently at the Credit Union National Association (CUNA) Payment Systems Conference.  In his speech, Hood promoted the best practices of enterprise wide risk management and concentrated on the evolving payment systems, remote deposit capture, money service businesses and emerging retail payments.