On February 7, the Board of Governors of the Federal Reserve System issued for comment a proposal amending two provisions of Regulation D (Reserve Requirements of Depository Institutions) as well as making clarifying amendments to certain provisions in Regulation I (Issue and Cancellation of Federal Reserve Bank Stock). These proposals were issued to implement provisions in the Financial Services Regulatory Relief Act of 2006.

The first proposed amendment to Regulation D would give authorized Federal Reserve Member banks (which include all national banks and state chartered banks that have applied for and received approval for membership) the ability to enter into “pass-through” arrangements with respect to their reserve requirements for certain deposits and other liabilities. Pursuant to such pass-through arrangements, a correspondent institution holds required reserves in a Federal Reserve account on a pass-through basis for an institution. According to the current regulations, only non-member banks may be a party to such pass-through arrangements and member banks must maintain required reserves in the form of cash in their vaults or as a balance in an account at a Federal Reserve Bank.

The second significant proposal would eliminate the provision in the “savings deposit” definition of Regulation D limiting certain kinds of transfers from savings deposits to not more than three per month. Pursuant to this proposal, all kinds of transfers and withdrawals from a savings account must be limited to not more than six per month.

Comments on the proposals are due 45 days after publication in the Federal Register.  http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20080207a1.pdf