Reg D Study Bill Passes House
H.R. 3240, the Regulation D Study Act, passed the House Tuesday by a unanimous 422-0 vote.
The bill would require the Government Accountability Office to make recommendations to Congress on how to update the law to better reflect modern technology and account usage. Reg D is an early 1980s-era policy that limits consumers to six remote transfers between their checking and savings accounts per month.
CUNA President/CEO Jim Nussle and NAFCU Vice President of Legislative Affairs Brad Thaler each wrote letters to leaders in the House of Representatives advocating for passage of bill.
“The impact of this limit is to unnecessarily cause credit union members to overdraft their checking accounts when a debit draws the checking account balance below zero and the member has already had six automatic transfers during the month,” CUNA President/CEO Jim Nussle said in a letter to House Minority Leader Nancy Pelosi (D-Calif.) and House Speaker John Boehner (R-Ohio) dated Dec. 2.
“When this happens, members who may have the funds in a savings account to cover the debit are hit with nonsufficient fund fees from their financial institution and, when a check is involved, a returned check fee from the merchant. This is not a result of an overdraft protection program – this happens because of a regulatory cap on automatic transfers,” he added.
Nussle said CUNA supports increasing or eliminating the cap on automatic transfers.
The bill was sponsored by Representatives Robert Pittenger (R-N.C.) and Carolyn Maloney (D-N.Y.).
“This effort will make more information available for Congress to determine whether an increase in or the elimination of this cap would substantially affect the Federal Reserve Board’s ability to conduct monetary policy,” Nussle said.
Thaler called Regulation D is a prime example of a regulation that Congress has not reconsidered for far too long.
“NAFCU believes a study of whether this outdated monetary reserve requirement imposed on depository institutions and consumers is necessary and believes the study would show strong evidence for the regulation’s full repeal,” Thaler wrote in a letter to Pelosi and Boehner.
Under the legislation, the GAO analysis would include Reg D operational requirements and associated costs, impact on consumers in managing their accounts, including the costs and benefits of the reserving system, and alternatives the Board of Governors may have to the maintenance of reserves to effect monetary policy.
While conducting the review, the Comptroller General would be required to consult with credit unions and community banks during the process.