In Brief: Fed Axing Obsolete Rules on Reserves

The Federal Reserve is streamlining its Regulation D to eliminate separate reserve requirements for nonmember banks. Those provisions became obsolete in 1980 when Congress made all banks subject to the same reserve requirements.

For example, the Fed is eliminating a provision that subjected state- chartered member banks that merged with nonmember banks to different reserve requirements.

The Fed also is asking for comment on what other portions of this rule should be amended.

Paul A. Smith, senior federal administrative counsel with the American Bankers Association, said the proposal to eliminate the obsolete provisions would have little effect on banks. But he urged banks to take advantage of the comment period to inform the Fed of any problems they may have with other sections of the rule. Comment letters are due by Aug. 16.

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