NEWS, EVENTS, PUBLICATIONS & EMERGING ISSUES

SW&M EMERGING ISSUE
June 26, 2009

REGULATION ''D'' AMENDMENTS – TRANSFERS FROM SAVINGS DEPOSITS

The Board of Governors of the Federal Reserve System (the “Board”) recently amended limits on certain “convenient” transfers from savings deposit accounts. Prior to the amendment, Regulation “D” provided a limit of six (6) monthly convenient transfers or withdrawals from a saving deposit account. Such convenient transfers include preauthorized or automatic transfers, telephonic transfers, and transfers by check, debit card, or similar order payable to third parties; in addition, no more than three (3) of the six (6) monthly convenient transfers or withdrawals may be made by check, debit card, or similar order made by the depositor and payable to third parties (the “three transfer sublimit”). The Regulation does not limit the number of (1) transfers for the purpose of repaying loans and associated expenses at the same institution; (2) transfers from the savings deposit account to another account at the same institution; or (3) withdrawals (i.e., payments directly to the depositor) when such withdrawals are made by mail, messenger, automated teller machine, in person, or by telephone (via check mailed to the depositor).

Under the Regulation “D” amendment, the Board has eliminated the “three transfer sublimit.” However, savings deposit accounts remain subject to the overall limit of six (6) monthly convenient transfers.

While the Regulation “D” amendment has an effective date of June 29, 2009, we note that the Board chose to make its final rule “permissive.” Under the final rule, credit unions may continue to classify accounts subject to the “three transfer sublimit” as “savings deposits” for “as long as necessary.” As such, credit unions appear to be permitted to maintain a “three transfer sublimit,” if they so choose, provided that savings deposit accounts remain subject to the six (6) monthly transfer limit under Regulation “D.”

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