WASHINGTON - The Federal Reserve Board on Wednesday gave institutions permission to offer discounts to customers who maintain a minimum balance in a variety of bank and nonbank products.
Bankers wanted the change so they could compete more freely with securities firms, which offer package discounts on their products.
The Fed did make two changes from its original proposal. It expanded the rule so trust companies can offer the combined-balance accounts.
And it said banks, as part of their business plans, can give greater weight to monies in specific types of accounts. But the central bank said deposits always must receive a weight equal to or higher than all other accounts.
Karen Thomas, director of regulatory affairs at the Independent Bankers Association of America, said the ruling on deposits makes the proposal more palatable to community bankers.
By providing a safeguard for deposit accounts, the Fed ensures that banks won't limit the discounts to customers who use nontraditional products, she said.
Reg. Y, known as the anti-tying rule, prevents banks from requiring a customer to purchase one product to receive a discount on another.
But, the Fed has been carving out exemptions during the past two years. This exemption allows customers to use balances in checking, savings, money market, and brokerage accounts to meet the minimum balance needed to qualify for a reduced-fee account.
The Fed, in the case that prompted today's change, gave Fleet Financial Group Inc. permission to offer the combined-balance discounts in October 1994.
