Federal Register, Volume 74, Number 102, May 29, 2009, Pages 25613-26076 Page: 25,632
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Federal Register/Vol. 74, No. 102/Friday, May 29, 2009/Rules and Regulations
depository institutions to select their
own numeric limits on convenient
transfers and withdrawals from savings
deposits.
The Board also believes that selecting
a monthly numeric limit to apply to all
types of transfers and withdrawals from
"savings deposits," including those
types that are currently unlimited in
number per month, would not be
appropriate. The Act provides that a
"transaction account" is one "on which
the depositor or account holder is
permitted to make withdrawals by
negotiable or transferable instrument,
payment orders of withdrawal,
telephone transfers, or other similar
items for the purpose of making
payments or transfers to third persons or
others." 9 As such, the statutory
definition specifically contemplates the
kinds of transfers and withdrawals that
are, or are most likely to be, transfers
and withdrawals "for the purpose of
making payments or transfers to third
persons or others." In contrast,
withdrawals made in person or at an
ATM are generally payments directly to
the depositor, even if the depositor may
subsequently provide those same funds
to a third person or use them for a
payment. Accordingly, the Board has
determined that the final rule not
impose numeric limits on all types of
transfers and withdrawals that may be
made from savings deposits, including
those that are currently unlimited.
Finally, the Board believes that
delaying the effective date for the final
rule eliminating the "three" sublimit
from the definition of "savings deposit"
is unnecessary because the final rule is
permissive. Under the final rule,
depository institutions may classify
accounts subject to the "three" sublimit
as "savings deposits" as long as
necessary. Accordingly, the Board has
determined not to delay the final rule's
effective date.
C. Section 204.2(k) "Vault Cash"
Definition
(1) Background of Proposed
Amendment
From 1917 to 1959, the Act permitted
member banks to satisfy reserve
requirements solely with balances in
their accounts at Federal Reserve Banks.
In 1959, Congress amended section 19
of the Act to provide that the Board,
"under such regulations as it may
prescribe, may permit member banks to
count all or part of their currency and
coin as reserves required under this
section." 1o The history of the 1959
9 12 U.S.C. 461(b).legislation recognized that currency and
coin in a member bank's vault and a
balance in a member bank's account at
a Federal Reserve Bank were
"interchangeable" as liabilities of the
Reserve Banks.11 For operational
reasons, however, "country banks"
generally found it necessary to hold
more currency and coin in their vaults
than did "reserve city banks" or
"central reserve city banks." 12
In 1970, the Board issued an
interpretation of Regulation D relating to
the eligibility of currency or coin held
principally for numismatic value to
satisfy member bank reserve
requirements.13 The Board specified in
the 1970 interpretation that in order for
a member bank to count currency or
coin towards reserve requirements, the
member bank must have "the full and
unrestricted right to use [such currency
or coin] at any time to meet depositors'
claims. * * * "14 The 1970
interpretation also specified that a bank
does not have such a "full and
unrestricted right" if the bank is
prevented, legally or practically, * * *
from using the currency or coin at any
time to meet customer's demands." 15
The 1980 amendments to Regulation
D, which implemented the Monetary
Control Act of 1980, introduced "vault
cash" as a defined term. The 1980
amendments defined "vault cash" to
mean "currency and coin owned and
held by a depository institution that
may, at any time, be used to satisfy
depositors' claims," incorporating into
the new definition the 1970
interpretation's principles of bank
ownership and availability at any time
to satisfy depositors' claims. Subsequent
Board guidance and staff opinions
provided additional clarification of
these requirements, including clarifying
what vault cash is "owned and held" by
the depository institution claiming it
and the circumstances under which
vault cash is "immediately available."
(2) Proposed Amendment and
Comments
The Board proposed amending the
definition of "vault cash" to incorporate
the substance of prior written staff
guidance as to when currency and coin
that the depository institution does not
hold at its physical location may be
considered "vault cash." 16 Specifically,
the Board proposed dividing the
' S. Rep. No. 86-195, at 3 (1959); H. Rep. No. 86-
403, at 3 (1959).
12Id.
13 Former 12 CFR 204.116 (1979).
14Id
1Id.16 See, e.g. FRRS 2-307.2 (rented vault); Staff
Opinion of Aug. 9, 1982 (ATMs).definition of "vault cash" into two
subsections: one that addresses vault
cash "held at a physical location of the
depository institution * * * from which
the institution's depositors may make
cash withdrawals," and the other that
addresses vault cash "held at an
alternate physical location." The
amendments proposed by the Board
expanded primarily the second
proposed subsection to incorporate
prior guidance.
(3) Comment Analysis and Final
Amendment
The Board received two comments on
the proposed amendments to the
definition of "vault cash." One
commenter expressed support for the
proposed amendments, and one
commenter opposed the proposed
amendments. The commenter opposing
the amendments specifically opposed
certain provisions relating to when vault
cash at alternate physical locations may
be considered to be "immediately
available," namely, that (1) the
depository institution claiming the
currency and coin as "vault cash" must
receive it by 4 p.m. on the same day if
requested by 10 a.m., and that (2) the
depository institution must have a
written contract in place for the delivery
of the currency and coin claimed as
"vault cash." This commenter stated
that 4 p.m. should not be selected as a
cut-off hour because some depository
institutions conduct business after 4
p.m., and because customers can
usually obtain cash through an ATM or
at POS (point of sale) terminals after 4
p.m. The commenter proposed an
amendment that would require the
currency and coin to be received on the
same calendar day that it is requested.
The commenter also stated that
requiring written contractual
arrangements for delivery of currency
and coin claimed as "vault cash"
imposes unnecessary costs on
depository institutions because
contractual agreements "will likely
never be used" and because updating
the agreements as offices are opened
and closed would be expensive. The
commenter proposed "leav[ing] the
particular details of the arrangement up
to the institution."
The Board believes that the selection
of 4 p.m. as a cut-off hour for
characterizing currency and coin as
"vault cash" under Regulation D is
appropriate. The Board believes that the
rationale provided for an alternate
"same calendar day" rule would not
justify such a significant departure from
the consistent position taken in
numerous Board staff opinions over the25632
10 The Act of July 28, 1959 (73 Stat. 263).
years on the issue. Furthermore, such a
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United States. Office of the Federal Register. Federal Register, Volume 74, Number 102, May 29, 2009, Pages 25613-26076, periodical, May 29, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc132964/m1/27/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.