WASHINGTON -- The Federal Reserve Board this month amended the Truth-in-Savings Act to comply with the recently enacted community development bank law.
The new provisions narrowed the scope of covered accounts to those held by individuals primarily for personal, family, or household purposes. Accounts held by groups like book clubs or softbail teams are no longer covered.
The Fed calls these types of groups "unincorporated nonbusiness associations of individuals."
The change will have no significant impact on banks' costs, including those of small institutions, according to the Fed.
Congress eliminated this class of depositors from the Truth-in-Savings Act under the Community Development and Regulatory Improvement Act, passed last month. Because the central bank had no discretion in the matter, it put the rule out in final form rather than as a proposal.
The purpose of Truth-in-Savings, also known as Regulation DD, is to help consumers compare deposit accounts offered by different institutions. Banks must disclose the fees, the interest rate, and the annual percentage yield and other account terms before the account is opened and whenever the consumer requests the information.
Separately, the Fed continues to work on a new way of calculating the annual percentage yield.