WASHINGTON (12/2/14)--The U.S. House is expected to take up a bill today that would initiate a study of reforms to the Federal Reserve's Regulation D, and which could lead to a fix of the rule's arbitrary limit of six transfers per month from a savings account.
H.R. 3240 is strongly supported by the Credit Union National Association because the transaction limit is confusing and can cause credit union members to overdraw a checking account when a debit draws an account balance below $0 and the limit on transfers from another account has already been hit.
CUNA supports an increase in the transaction cap, or for it to be eliminated altogether.
In July, CUNA testified on behalf of the Reg D Study Act introduced by Reps. Robert Pittenger (R-N.C.) and Carolyn Maloney (D-N.Y.). CUNA witness Doug Fecher, president/CEO of Wright-Patt CU, Beavercreek, Ohio, with $2.8 billion in assets, said CUNA acknowledges that one of the reasons the regulation is in place is because the Federal Reserve uses it as a tool to conduct monetary policy.
However, Fecher referenced a quote from former Fed Chair Ben Bernanke, who said reserve balances far exceed requirements, and play only a "minor role" in the daily implementation of modern monetary policy.
"A (Government Accountability Office) study will allow an objective assessment of whether the rarely changed monetary reserves imposed on depository institutions and consumers are necessary in order for the Fed to implement monetary policy in the 21st century," Fecher said.
The bill's primary sponsor, Pittenger, argues that Reg D is "truly obsolete" in this age of online and mobile banking. He said on the House floor this summer that the rule harkens back to a time when most banking transactions "ended with giving a free lollipop."
CUNA has also supported the proposed measure in letters to lawmakers urging them to approve the GAO study: The most recent was sent Monday to Reps. John Boehner (R-Ohio), speaker of the House, and Nancy Pelosi (D-Calif.), House minority leader; an earlier letter was sent in July 2013.
Overall the bill instructs the GAO to consult with credit unions and community banks as it examines the regulation, and to report within one year of enactment, on the following: