What's New: Transaction Account Guarantee Program Extended

On April 13, 2010, the FDIC adopted an interim final rule extending the Transaction Account Guarantee (TAG) program through December 31, 2010 for institutions participating in the program. Institutions that wish to opt out of the TAG extension must submit a request to opt out on or before April 30, 201o.

The FDIC Board of Directors has the authority to grant an additional 12-month extension of the program, through December 31, 2011, without further rulemaking, if it determines that continuing economic difficulties warrant such extension.

The maximum interest rate limit for NOW accounts guaranteed under the TAG program will be 0.25 percent, effective July 1, 2010.

Financial institutions currently participating in the TAG program should review its disclosures and modify them as necessary to ensure that they will be accurate after June 30, 2010.

This topic is further addressed in the Standard Maximum Deposit Insurance section of The Gold Book.

What's New: Revised Privacy Notice (Reg P)

Federal regulators released an Online Form Builder that financial institutions can download and use to develop and print customized versions of a model consumer privacy notice.

The Online Form Builder, based on the model form regulation published in the Federal Register on December 1, 2009, under the Gramm-Leach-Bliley Act, is available with several options. Easy-to-follow instructions for the form builder will guide an institution to select the version of the model form that fits its practices, such as whether the institution provides an opt-out for consumers.

To obtain a legal "safe harbor" and so satisfy the law's disclosure requirements, institutions must follow the instructions in the model form regulation when using the Online Form Builder.

Click here for additional information including compliance requirements and dates.

What's New: Final Reg E Rules on Overdraft Services

The final rule will enable consumers to limit the costs of overdraft services by providing consumers a choice regarding their institution's payment of overdrafts for ATM and one time debit card transactions. Consumers will also be provided a clear disclosure of the fees and terms associated with the institution's overdraft service.

Opt-In. The final rule requires consumers to opt in, or affirmatively consent, to the institutions' overdraft service for ATM and one time debit card transactions, before overdraft fees may be assessed on the account. The rule also provides consumers an ongoing right to revoke consent.

Consumers Covered. The opt-in right applies to all consumers, including existing account holders.

Conditioning the Opt-In. The final rule prohibits financial institutions from tying the overdraft payment of overdrafts for check and other transactions to the consumer opting into the overdraft service for ATM and one time debit card transactions.

Same Account Terms, Conditions and Features. The final rule requires institutions to provide consumers who do not opt in with the same account terms, conditions and features, including price, as provided to consumers who do opt in.

Mandatory Compliance Date. The mandatory compliance date is July 1, 2010.

The Gold Book has been updated for these new rules. See Bounce Protection and Reg E notice requirements for additional details and requirements.

Final Rules Restrict Fees, Expiration Dates on Gift Cards

The Federal Reserve Board on Tuesday announced final rules to restrict the fees and expiration dates that may apply to gift cards. The rules protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated.

The final rules prohibit dormancy, inactivity, and service fees on gift cards unless: (1) the consumer has not used the certificate or card for at least one year; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.

The Board's rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.

The final rules are issued under Regulation E to implement the gift card provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009.

The final rules are effective August 22, 2010.

U.S. Government to Unveil New $100 Note on April 21

The new $100 note design will make its debut on Wednesday, April 21 during a ceremony at the Department of the Treasury's Cash Room.

The unveiling of the $100 note is the first step in a global multi-government agency public education program implemented by the Department of the Treasury, the Federal Reserve Board and the U.S. Secret Service, to educate those who use the $100 note about its changes before it begins circulating.

To read more, please visit www.newmoney.gov.

Board Issues Supervisory Guidance and Regulations on the FFIEC’s Retail Payment Systems Booklet

The Federal Financial Institutions Examination Council (FFIEC) has issued updated guidance for examiners, financial institutions and technology service providers on the risks and risk-management practices applicable to financial institutions’ retail payment systems activities. The guidance, which is included in the FFIEC Information Technology Examination Handbook, is an update to the “Retail Payment Systems Booklet” (Booklet), which was issued in March 2004.

The revised Booklet provides risk identification and management guidance related to the operational impact of The Check Clearing for the 21st Century Act of 2004 (commonly known as the Check 21 Act). It also provides expanded guidance on merchant card processing and automated clearinghouse (ACH) activities, with a more in-depth discussion of the risks posed by these activities and some of the risk-management tools financial institutions can use to mitigate them. There are also brief discussions addressing some of the emerging technologies in retail payment systems, including contactless payment cards, biometrics and proximity payments. The Booklet includes information on remotely created checks and electronically created payment orders, both of which are being used more frequently as payment devices in today’s rapidly evolving payments landscape.

Lastly, the Booklet addresses remote deposit capture activities and provides examination work steps for use in conjunction with the January 14, 2009, FFIEC guidance on “Risk Management of Remote Deposit Capture” (SR letter 09-2).

Check Processing Infrastructure Changes Complete

The Federal Reserve Banks has completed the reduction in paper check processing infrastructure that was begun in late 2003. With the discontinuation of paper check processing at the Atlanta office on Friday, Feb. 26, 2010, all paper check processing is now handled at the Cleveland office. The Atlanta office serves as the Reserve Banks' processing location for electronic check processing.

"The movement to a single paper check processing site is recognition of the industry's success in moving to more efficient electronic solutions for clearing checks," said Patrick K. Barron, first vice president of the Federal Reserve Bank of Atlanta and Retail Payments Office director. "The changes we have implemented to our paper check infrastructure position us well to continue to meet the needs of the nation's payments system. At the same time, they have been difficult for our organization as we have been required to reduce our staff."

Since late 2003, the Reserve Banks have reduced the number of locations where paper checks are processed from 45 offices to a single site in Cleveland. These changes were made in response to the significant rate of adoption of Check 21-enabled services as well as the shift away from the use of paper checks and toward the much greater use of electronic payments.

The implementation of the Check Clearing for the 21st Century Act in October, 2004, significantly reduced the number of check items collected in paper form throughout the industry. At the time Check 21 went into effect, 100 percent of the items processed by the Reserve Banks were in paper form. Today, almost 99 percent are processed as images. As one of the nation's largest inter-bank processors of electronic check transactions, the Federal Reserve will continue to play an important role in the evolution of the nation's payments system.

Proposed Rules to Protect Credit Card Users

The Federal Reserve Board has proposed a rule amending Regulation Z (Truth in Lending) to protect credit card users from unreasonable late payment and other penalty fees and to require credit card issuers to reconsider increases in interest rates.

Among other things, the proposed rule would:

• Prohibit credit card issuers from charging penalty fees (including late payment fees and fees for exceeding the credit limit) that exceed the dollar amount associated with the consumer's violation of the account terms. For example, card issuers would no longer be permitted to charge a $39 fee when a consumer is late making a $20 minimum payment. Instead, the fee could not exceed $20.


• Ban inactivity fees, such as fees based on the consumer's failure to use the account to make new purchases.


• Prevent issuers from charging multiple penalty fees based on a single late payment or other violation of the account terms.


• Require credit card issuers to inform consumers of the reasons for increases in rates.


• Require issuers that have increased rates since January 1, 2009, to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.

The proposed rule represents the third stage of the Federal Reserve's implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009. The provisions of the Credit Card Act addressed in this proposal will go into effect on August 22, 2010. In July 2009, the Board issued a rule implementing the provisions of the Credit Card Act that went into effect on August 20, 2009. In January 2010, the Board issued a rule to implement the provisions of the Credit Card Act that went into effect on February 22, 2010.

Online Consumer Guide to Credit Cards

The Federal Reserve Board launched a new interactive website to help consumers better understand the new credit card protections that will took effect on February 22. These rules ban several harmful practices and require greater transparency in the disclosure of the terms and conditions of credit card accounts.

The site, which can be found at www.federalreserve.gov/creditcard, summarizes the main provisions of the rules and explains how they will affect credit card users. Two interactive features will allow consumers to learn more about the terms and fees of credit card offers and about the new features of their monthly statements.

Information about recent changes in credit card rules forms the core of the site, but basic facts about common credit card options, interest rates, and fees are also provided. Consumers will find a glossary of common credit card terms for quick reference. A list of federal credit protection laws provides a basic guide for those who want to learn more about their rights.

The site also provides information about common credit card problems--such as lost or stolen cards--and links to resources for consumers who are experiencing problems with their accounts.

Some of the material on the site, such as the "5-Tips" publications, is available in Spanish. The Board will continue to build the site during the coming months to include additional credit card information, features, and Spanish translations.

The web address for the Federal Reserve's guide to credit cards will appear on the solicitations consumers receive from credit card issuers.

Regulators Issue Statement on Lending to Creditworthy Small Businesses

The federal financial regulatory agencies and the Conference of State Bank Supervisors (the regulators) issued a statement today on prudent lending to creditworthy small business borrowers.  The regulators recognize that small businesses play an important role in the economy and know that some are experiencing difficulty in obtaining or renewing credit.

The statement emphasizes that financial institutions that engage in prudent small business lending after performing a comprehensive review of a borrower's financial condition will not be subject to supervisory criticism for small business loans made on that basis. Financial institutions should understand the long-term viability of the borrower's business and focus on the strength of a borrowers' business plan to manage risk rather than using portfolio management models that rely primarily on general inputs, such as a borrower's geographic location or industry.

The regulators are working with the industry and supervisory staff to ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound small business borrowers.

What's New: Regulation CC Amendments

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve Banks' check-processing operations.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.

On February 27, 2010, the Reserve Banks will transfer the check-processing operations of the head office of the Federal Reserve Bank of Atlanta to the head office of the Federal Reserve Bank of Cleveland. To ensure that the information in Appendix A accurately describes the structure of check-processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Atlanta head office and reassigns the routing numbers listed thereunder to the Cleveland head office.

To coincide with the effective date of the underlying check processing changes, the amendments are effective February 27, 2010. At that time, there will only be a single check-processing region for purposes of Regulation CC and there will no longer be any checks that are nonlocal.

Funds availability is discussed in-depth in The Gold Book.

Federal Reserve Launches New Website for Bank Directors

The Federal Reserve has launched a website to help new bank directors learn how they can work to ensure the safety and soundness of their institutions. The website, BankDirectorsDesktop.org, also provides a refresher course for experienced board members.

BankDirectorsDesktop.org is tailored to directors of community banks and features online training and other resources to help directors better understand the issues and challenges associated with serving on a bank's board.

The website includes links to the "Training for Bank Directors" interactive course and the latest edition of Basics for Bank Directors, a comprehensive guide to directors' roles and responsibilities.

Federal Reserve Introduces Online Regulatory Filing System

The Federal Reserve on Monday announced the availability of Electronic Applications, or "E-Apps," a new Internet-based system for financial institutions to submit regulatory filings. E-Apps allows firms and their representatives to file applications online, eliminating the time and expense of printing, copying, and mailing the documents. Registered users can access the system at any time to upload additional documents or create new filings. There are no fees for using E-Apps.

E-Apps has been designed to ensure the confidentiality of the data and the identity of individual filers. Institutions ready to start using E-Apps can find sign up forms at http://www.federalreserve.gov/bankinforeg/eappssignup.htm.

Fed Banks To Examine Check & Electronic Payments Usage

The Federal Reserve Banks have announced plans to conduct another series of studies to determine the current volume and composition of check and electronic payments in the United States. These studies will build on information gained from similar studies conducted by the Reserve Banks in 2001, 2004 and 2007.

The 2010 Federal Reserve Payments Study consists of three research efforts commissioned to estimate the annual number, dollar value and composition of retail noncash payments in the United States. Together, the studies will provide aggregate estimates and current trends in the use of noncash payment instruments by U.S. consumers and businesses.

What's New: 2010 Rules for Roth IRAs

Beginning January 1, 2010, the income and filing requirements for rollovers (including conversions) to a Roth IRA were eliminated. Additionally, for rollovers to a Roth IRA in 2010 only, a special 2-year option for reporting taxable portions of a rollover is available to taxpayers.

Previously, taxpayers were permitted to roll over (convert) a traditional IRA, SEP-IRA, SIMPLE IRA, and an eligible rollover distribution from an employer's retirement plan (other than from a designated Roth account) to a Roth IRA only if the following requirements were met:

• AGI for Roth IRA purposes was $100,000 or less; and


• tax filing status was not married, filing separate.

Under the new rules for 2010, regardless of income or filing status, individuals may roll over (convert) the following to a Roth IRA:

• a traditional IRA, SEP-IRA or SIMPLE IRA;


• an eligible rollover distribution from a 401(k), 403(b) (or similar plan, as permitted);


• an eligible rollover distribution to a beneficiary from a retirement plan.

For rollovers and conversions to a Roth IRA in 2010 only, taxpayers have the option of reporting all of the taxable portion of the rollover in 2010, or reporting half in 2011 and half in 2012.

Additional information about Roth IRA Conversions and Rollovers, Qualified Rollovers and the Taxation of Roth IRA conversions may be found in The Gold Book.

What's New: FinCEN Provides Educational Pamphlet on CTRs

The Financial Crimes Enforcement Network (FinCEN) is providing an educational pamphlet, "Notice to Customers: A CTR Reference Guide," for financial institutions and their customers containing information on the currency transaction reporting (CTR) requirement. The pamphlet is provided as a resource for financial institutions to help address questions frequently asked by their customers.

For example, the pamphlet explains that large currency transactions are not illegal, and that financial institutions are required to obtain information from their customers when these transactions do occur. The pamphlet does not alter in any way a financial institution's BSA reporting requirements and explains that if a customer attempts to break up, i.e. "structure," transactions in order to evade the CTR reporting requirement there are potential civil and criminal consequences. In the pamphlet, FinCEN explains what constitutes structuring and provides examples of structured transactions.

The pamphlet may be found at:
http://www.fincen.gov/whatsnew/pdf/CTRPamphlet.pdf

A Spanish version of the pamphlet may be found at:
http://www.fincen.gov/whatsnew/pdf/espanal_CTRPamphlet.pdf

Information on Currency Transactions Reports is found in the Compliance chapter of The Gold Book.

What's New: Model Privacy Notices Available

Joint federal regulatory agencies have released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The model form can be used by financial institutions to comply with these requirements.

See Model Privacy Notice for details and links to model notices.

What's New: Annual Adjustments for Reserve Calculations & Deposit Reporting

The Federal Reserve Board recently announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2010. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2010.

See sub-chapter Reserve Requirements for updated information.

What's New: Final Rules on Overdraft Services

The Federal Reserve Board announced final rules prohibiting institutions from charging fees for overdrafts on ATM and one-time debit card transactions.

The final rules will enable consumers to limit the costs of overdraft services by providing consumers a choice regarding their institution's payment of overdrafts for ATM and one-time debit card transactions. Financial institutions will be required to provide a clear disclosure of the fees and terms associated with the institutions' overdraft service.

Consumers may opt in or affirmatively consent, to the institution's overdraft service for ATM and one-time debit card transactions, before overdraft fees may be assessed on the account. The rule also provides consumers an ongoing right to revoke consent.

For further information, including the mandatory compliance date, click here.

What's New: Agencies Announce Availability of 2008 HMDA Data

The Federal Financial Institutions Examination Council (FFIEC) has announced the availability of data on mortgage lending transactions at 8,388 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies.

The HMDA data cover 2008 lending activity—applications for loans, loan originations, loan denials, and purchases of loans. The data also include disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics regarding lending patterns, and Loan Application Registers (LAR) for each financial institution (LARs modified for borrower privacy).

The FFIEC prepares and distributes this information on behalf of its member agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision) and the Department of Housing and Urban Development.

Financial institution disclosure statements, individual institutions' LAR data, and MSA and nationwide aggregate reports are available at http://www.ffiec.gov/hmda. Refer to the HMDA data products at http://www.ffiec.gov/hmda/hmdaproducts.htm for the item descriptions and formats.

For further information see HMDA FAQs.