Legal Interpretations
Federal Reserve Act - 1999 Letters
November 2, 1999
To Peoples Bank stating that staff would not consider a sweep account arrangement to be in violation of Regulation D, 12 CFR 204. The Bank proposes to establish for large commercial customers a high minimum balance non-interest-bearing transaction account ("DDA") and an interest-bearing money market deposit account ("MMDA"), and would sweep all funds in excess of a set threshold from the DDA into the MMDA and vice versa. No check writing privileges would be offered, and daily sweeps could occur from the DDA to the MMDA, but sweeps from the MMDA to the DDA would be limited to six per statement cycle. In the event that excessive debits are noted on a particular sweep account, the Bank would either close the account or raise the high threshold amount to a level that would ensure compliance with the limitation.
March 18, 1999
To TCF National Bank Minnesota, regarding the use of currency in ATM machines in Illinois as vault cash for purposes of Regulation D, 12 CFR 204.(k)(1). For ATM currency to be counted as vault cash, it must be "reasonably nearby." Under the Bank's cash retrieval plan, fourteen routes will be deployed to retrieve the cash from ATMs in Illinois, consolidate it in one city in Illinois, and then truck it 400 miles to the Bank in Minnesota. The estimated time for retrieval is approximately 20 hours, and staff does not believe that this cash can be considered "reasonably nearby."
January 21, 1999 Superseded in 2003 by Regulation W, 12 CFR 223.24
To Bruce Moland, Wells Fargo & Company, regarding the calculation of the quantitative limits under section 23A of the Federal Reserve Act for loans and extensions of credit that are secured by shares issued by an affiliate.
January 6, 1999
To Mr. Stephens Woodrough, regarding the application of 12 CFR 215.5(d) to a transaction involving an outside director of a bank. A non-insider paid a debt owed to a bank director using the proceeds of an unsecured personal loan obtained from that bank. The non-insider did not disclose the purpose of the loan at the time of the loan, and the director did not know that the loan had been obtained from the bank until after the debt was paid. Because the director is not an executive officer of the bank, his failure to disclose the transaction did not violate Regulation O. Nevertheless, staff believes that the director should report the transaction to the bank so that it will be available for examiners to review.