Federal Reserve Gives Financial Institutions Greater Transaction Account Flexibility

April 27, 2020 at 9:13 am Leave a comment

Over the weekend, there were two important developments involving key operational issues facing credit unions.

First, the Federal Reserve Board issued regulations amending Regulation D. As a result, credit unions now have the explicit right to allow members to make more than six (6) monthly transactions in their savings accounts without having to worry about reclassifying them as transaction accounts.

The purpose of Regulation D is to discourage the excessive use of transaction accounts by making financial institutions put aside reserves equal to a percentage of their transaction accounts. About six weeks ago (have we really been in COVID-19 mode for that long already?) the Federal Reserve Board eliminated the reserve requirements but much confusion has remained about how much flexibility this gave financial institutions. The promulgation of this regulation removes any of this uncertainty.

It’s Alive!

It’s back and better than ever. President Trump signed legislation replenishing the PPP. That means that starting Monday morning at 10:30AM EDT, the SBA will once again be accepting loan applications. The legislation did not change any of the lending terms but press reports indicate that the Treasury is taking a closer look at larger businesses which applied for the loans. In this round, Congress set aside two (2) $30 billion pots as part of the overall appropriation specifically to be used by institutions with up to $10 billion in assets and those with between $10 and $50 billion in assets.



Entry filed under: Compliance, COVID-19, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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