Regulation D (FRB)
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Reserve Requirements for Depository Institutions (12 C.F.R. 204, Regulation D) is a Federal Reserve regulation which sets out reserve requirements for banks in the United States. It is more familiar to the public as the regulation that limits monthly withdrawals from savings accounts.
The regulation requires depository institutions to keep cash reserves in order to meet immediate withdrawals against their transaction accounts. The minimum reserve requirement is 3% of the total amount over $16 million, and an additional 7% of the amount over $122.3 million. The institution may satisfy the requirement with vault cash and with deposits at a Federal Reserve Bank, or a bank that acts as a Federal Reserve correspondent. Bankers' banks and corporate credit unions, which act only as correspondents for other institutions, are not subject to the reserve requirements. The Federal Reserve Board of Governors may require additional reserves after consulting Congress or deposit insurance authorities.
In consumer banking, "Regulation D" often refers to §204.2(d)(2) of the regulation, which limits withdrawals or outgoing transfers from a savings or money market account. No more than six such transactions per statement period may be made from an account by various "convenient" methods, which include checks, debit card payments, and automatic transactions such as automated clearing house transfers or electronic bill payment. Institutions must warn any customer that exceeds the limit and must freeze, close or reclassify accounts that do so repeatedly. The regulation does not limit transactions made in person, at an ATM, by mail, or by telephone request for a mailed check. Even in these cases, the institution may require seven-day advance written notice before releasing funds. This right is not normally exercised, but it must be part of the account agreement.
Each institution sets its own policies for responding to violations of the limit, and may place stricter limits than what the regulation requires. Discover Bank, for example, will close a savings account if Regulation D is exceeded 3 or more times in a 12-month period. Wells Fargo charges a $15 "Excess Activity Fee" for each item cleared after the regulation has been exceeded, and converts the account to a checking account if the activity persists.
The regulation was amended in 2009 to allow greater freedom for the depositor: beforehand, the limit was six withdrawals per month if the funds remained within the same institution (e.g., transfer to checking), but was only three drafts where the funds left the institution (e.g., check, ACH Network, or card based purchase).
- 12 C.F.R. 204
- Savings Deposits, in Regulation D - Reserve requirements, Federal Reserve
- Wells Fargo, "Savings & Checking Account Definitions: Excess Activity"
- "Federal Register, Volume 74 Issue 102 (Friday, May 29, 2009)". edocket.access.gpo.gov. Retrieved 1 August 2017.