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Adopted Regulations

Explanatory All Institutions Letter

October 30, 2006

TO THE INDIVIDUAL OR INSTITUTION ADDRESSED:

Re: Emergency Adoption of Amendment to Part 6.8 of the General Regulations of the Banking Board (Notification of Overdraft Protection Charges)

The attached amendment to Part 6.8, of the General Regulations of the Banking Board was adopted on an emergency basis and became effective on October 30, 2006 . An emergency regulation in substantially similar form was previously adopted in February, 2006.

At its February 2, 2006 meeting, the Banking Board adopted a new Part 6.8, authorizing State-chartered banks, trust companies and thrift institutions to charge a daily overdraft or bounce protection fee on checks, other payment orders, or electronic transactions (hereafter “checks”) accepted or honored for which there are insufficient funds when an account does not have an overdraft line of credit pursuant to Section 108(5) of the Banking law or is not a linked account.

In a related action, the Banking Board also adopted on an emergency basis an amendment to new section 6.8, adding a new paragraph (e) making it clear that the notice to account holders which is called for by the guidelines of the federal banking agencies regarding overdraft protection programs must be separately given and be “clear and conspicuous” in cases in which bounce protection will be applied to a new or existing account. Such notice is to be given to any customer, whether consumer or commercial, who is subject to bounce protection charges authorized by the new wild card authority; that is, charges which go beyond the one-time fee previously permitted under the Department’s regulations.

Adoption of this amendment on an emergency basis ensures that customers whose accounts are covered by these newly permissible bounce protection charges are promptly and clearly notified of that fact. However, the Banking Board determined that it was necessary to defer the effective date of the separate notice requirement by 90 days, to May 7, 2006, to ensure that banking institutions had sufficient lead time for compliance.

Very truly yours,

Sam L. Abram
Secretary of the Banking Board

Text of emergency amendment to Part 6.8