The Federal Reserve Board on Wednesday withdrew a controversial Truth- in-Savings staff commentary.
The proposed commentary would have clarified how banks calculate interest during leap years. Bankers had complained that the commentary was too technical, overly confusing, and unnecessary. The Fed agreed in its May 22 notice, saying the proposal was burdensome.
The Fed also noted that an earlier staff commentary permits banks to calculate interest over 365 days or 366 days during a leap year, provided the customer's account was open on Feb. 29.
The withdrawn commentary also defined what the Fed meant by "compounding," "crediting," and "principal" - three terms used frequently in the Truth-in-Savings rules. The Fed said its proposed definitions could cause more problems than they resolved. The agency said it is considering revamping the definitions.