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Flashcards in Reg D Deck (25):
1

What institutions must meet reserve requirements mandated under Reg D?

- FDIC insured institutions (banks, savings banks, mutual savings banks, savings associations, etc.)
- Insured credit unions
- Any member of a Federal Home Loan Bank
- A branch of a foreign bank located in the U.S.

2

A demand deposit is defined as a deposit payable on demand or with a maturity or required notice period of less than __ days or for which the bank does not reserve the right to require at least __ days' notice of withdrawal.

7
7

3

A time deposit is defined as a deposit that has a maturity of at least __ days.

7

4

What are the exceptions for not charging an early withdrawal penalty?

- Death of an account owner
- Account owner is determined to be legally incompetent
- Account owner is disabled or aged 59.5 and withdraws from an IRA.
- Account owner withdraws from a time deposit within 10 days after maturity.

5

T/F: A Report of Deposits must be filed with the Federal Reserve Bank in the district where the institution is located using Form FR 2900.

True

6

How must a bank maintain reserves, as required by Reg D?

- Vault cash
- Balances in a Federal Reserve Bank
- Pass-through correspondent

7

How often must banks report on their reserves, as required by Reg D?

weekly or quarterly

8

How are reserves computed under Reg D?

By applying the appropriate reserve ratio to net transaction accounts, non-personal time deposits and Eurocurrency liabilities.

9

Deficiencies in an institution's required reserve balance are subject to a charge equal to the primary credit rate in effect for borrowings from the Federal Reserve Bank plus __%.

1%

10

Which one of the following items is NOT eligible as a form of reserves?

a. Vault cash
b. Balance maintained with the Federal Reserve Bank
c. Pass-through account maintained at a member bank
d. Government securities

d. Government securities

11

Which of the following accounts is subject to reserve requirements?

a. A savings account owned by an individual
b. An IRA account
c. A time deposit owned by a trust for an individual
d. A checking account owned by an individual

d. A checking account owned by an individual

12

Which of the following account monitoring systems would not achieve compliance with Regulation D’s classification of “savings accounts”?

a. The bank allows customers to open money market savings accounts and make unlimited withdrawals by check. However, after the sixth check the bank converts the account to a regular checking account for the remainder of the month. At the beginning of the next month, the account reverts to a money market savings account until the customer writes a seventh check on the account.
b. The bank allows customers to make only the required number of withdrawals and preauthorized transfers on money market accounts, but the bank has no system for preventing the customer from writing too many checks on the account. The bank reviews its records and warns its customers who make too many withdrawals that the account will convert to a checking account if too many withdrawals occur again.
c. The bank offers money market accounts and has a sophisticated computer program that will not allow an improper number of transactions to occur.
d. The bank offers money market accounts. If the depositor makes too many transfers, the account converts to a transaction account and does not convert back to a non-transaction account.

a. The bank allows customers to open money market savings accounts and make unlimited withdrawals by check. However, after the sixth check the bank converts the account to a regular checking account for the remainder of the month. At the beginning of the next month, the account reverts to a money market savings account until the customer writes a seventh check on the account.

13

According to Regulation D, when may interest be paid on money market deposit accounts?

a. At maturity
b. When there are six or fewer preauthorized transfers permitted per month
c. When the deposit is less than $100,000
d. If the financial institution imposes a service charge when there are more than six preauthorized transfers per month

b. When there are six or fewer preauthorized transfers permitted per month

14

Which of the following bank products are considered to be transaction accounts?

a. A savings account from which the bank pays third parties weekly pursuant to the depositor's written requests mailed to the bank
b. A savings account from which the customer regularly makes more than six telephone transfers per month
c. A money market certificate of deposit where the interest is credited monthly to another account of the depositor
d. A savings account into which weekly deposits are made from a checking account pursuant to the depositor's telephone requests

b. A savings account from which the customer regularly makes more than six telephone transfers per month

15

When may the Federal Reserve institute supplemental reserve requirements in addition to the basic reserve requirements?

a. When additional balances are needed for clearing purposes
b. When supplemental reserves are needed to impose monetary policy
c. When additional balances are needed to supplement the regular reserve cost structure
d. When the President directs it by Executive Order

b. When supplemental reserves are needed to impose monetary policy

16

Which of the following types of transactions should NOT be counted when monitoring the Regulation D transaction limits on money market deposit accounts?

a. ATM transactions
b. ACH utility payments
c. Debit card purchases
d. Internet bill paying transfers

a. ATM transactions

17

In May, a compliance officer discovers that, despite two previous warning letters, Mr. Jones has written checks drawn on his money market deposit account eight times in February, seven times in March, and seven times in April. The MOST appropriate action for the bank to take at this time is to send Mr. Jones a letter. What should the letter state?

a. A service charge is being assessed for the excess transactions.
b. Another type of account may better meet his needs.
c. That he is approaching the transaction limitation on his money market account
d. That he has exceeded his transaction limit and that another occurrence within a rolling 12-month period will result in account conversion to a demand-deposit account or other transaction account for which he is eligible.

d. That he has exceeded his transaction limit and that another occurrence within a rolling 12-month period will result in account conversion to a demand-deposit account or other transaction account for which he is eligible.

18

On a nontransferable certificate of deposit, which of the following activities is NOT allowed?

a. The customer's certificate is redeemed early owing to his or her death.
b. The customer discounts the certificate on a public market.
c. The customer pledges the certificate against his or her consumer loan.
d. The certificate is redeemed through the judicial action of a creditor exercising its legal remedies under the law.

b. The customer discounts the certificate on a public market.

19

Which of the following is a true statement regarding the imposition of charges for reserve deficiencies?

a. A penalty is always required for deficient reserve balances
b. Federal Reserve Banks may waive penalties for deficient reserve balances
c. An institution may choose to pay a penalty or maintain excess reserves during the next reserve period
d. Penalties are optional with the Federal Reserve Bank in all circumstances

b. Federal Reserve Banks may waive penalties for deficient reserve balances

20

Which of the following phrases, if stamped on a time deposit, is NOT effective to make the deposit nontransferable?

a. Not negotiable
b. Transferable only on the records of the bank
c. Transferable only with the permission of the bank
d. Not transferable

a. Not negotiable

21

Reg D mandates an early withdrawal penalty on time deposits of at least __ days' simple interest on withdrawals made within __ days of opening or renewal.

6
7

22

Reg D restricts the number of transactions permitted from savings accounts. How many preauthorized transfers or withdrawals may be allowed per month or statement cycle, whichever is longer?

6

23

Can a bank waive the early withdrawal penalty that's mandated on time deposits under Reg D?

Rarely. Only if falls under an exception.

24

What transactions are unlimited on deposit accounts?

- Deposits
- Payments for loans at the same bank
- Withdrawals made by mail*, messenger, ATM or performed in person.

*Mail exception is very specific: must request a withdrawal and check prepared to be sent back to account holder.

25

If an account holder violates Reg D transaction limits 3 times in a 12 month period, what is a bank required to do?

- Close account, or
- Move to transaction account