Repeal of Part 20 of the General Regulations of the Banking Board (Payment of
Interest on Commercial Bank Deposits) - All Institutions Letter
June 15, 2011
TO THE INDIVIDUAL OR INSTITUTION ADDRSSED:
Re: Repeal of Part 20 of the General Regulations of the Banking Board (Payment of Interest on Commercial Bank Deposits)
On June 10, 2011 the Banking Board repealed Part 20 of its General Regulations. The repeal will become effective upon its publication in the State Register, which is expected to occur on June 29, 2011.
Part 20 of the General Regulations of the Banking Board prohibits banks, trust companies, private bankers, Article XII investment companies and branches and agencies of foreign banks from paying interest on deposits or credit balances which are payable on demand. The regulation parallels existing federal law restrictions on such payments which are applicable to national banks, insured state banks and federal and state branches and agencies of foreign banks.
Section 627 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter “Dodd-Frank”) amended Section 19 of the Federal Reserve Act to repeal the prohibition on banks making payment of interest on transaction or demand deposit accounts. The repeal will be effective July 21, 2011, one year after the enactment of Dodd-Frank.
Repealing Part 20 conforms the regulations of the Department to the change in the federal rules, allowing institutions covered by the Department’s regulation to offer demand account products that are competitive with those that federally regulated institutions will be able to offer.
The Notice of Proposed Rule Making was published in the April 6, 2011 State Register. The comment period expired May 21, 2011.
Comments should be sent to Sam L. Abram, Secretary of the Banking Board, at the above address or by email at email@example.com.
Very truly yours,
Sam L. Abram
Secretary of the Banking Board