WASHINGTON—CUNA is continuing its push for the Federal Reserve to remove the monthly account transfer limit under Regulation D.
Previously, in a March 18 letter, CUNA called for the removal of the limit, saying that it would allow easier access to funds during the coronavirus disease (COVID-19) pandemic.
While the Fed recently voted to eliminate reserve requirements, in a new letter CUNA notes that action does not provide the relief CUNA requested, as a frequently asked questions (FAQ) document released on the vote merely details several steps a credit union could take to bypass the transfer and withdrawal limit.
“We appreciate that the FAQs offer a path to eliminate the transfer limit; however, the method detailed of re-designating accounts as transaction accounts and updating reporting to the Federal Reserve is not necessarily a simple one that credit unions can easily make, especially with constrained resources from the COVID-19 pandemic,” the letter reads. “Therefore, these FAQs do not adequately address our previous request because they maintain the Regulation D in its current form and could lead to inconsistent application by each Reserve Bank. Because credit unions need a less burdensome solution, we, again, request that the Board remove the transfer and withdrawal limit.”
Other Burdens
CUNA further argues other burdensome issues with the method mentioned in the FAQ of removing transaction limits include:
- Credit unions will likely need to provide members with new account disclosures if they re-designate savings accounts as transaction accounts
- Core processing systems will require updates to change account reporting to generate FR 2900 reports that reclassify accounts, which will be difficult and time-consuming to make at this time
- As acknowledged in the FAQ, financial institutions will have difficulty notifying and explaining changes to consumers during the current challenging operating environment
CUNA called on the Fed to make this regulatory changes soon, “so it is easier for Americans to access their funds.”