WASHINGTON — The House passed a CU-backed bill Tuesday to study the effects of a Federal Reserve Board rule restricting the number of transactions customers can make with their savings accounts each month.
The Fed's Regulation D, which is intended to manage the nation's money supply, requires banks to hold reserves against certain types of deposits. But it also limits depositors to six online transfers or automatic withdrawals per month for non-transaction accounts.
With online banking becoming more dominant, the legislation would require the Government Accountability Office to examine the regulation's effects. Proponents of the bill say the restrictions can make customers liable to surprise fees for going over the transaction limit, including overdraft fees that can arise when a depositor links a savings and checking account.
"The regulators who created this rule never envisioned online banking and modern banking technology," said Rep. Robert Pittenger, R-N.C., who introduced the bill. "As technology advances, we need to make sure federal regulations keep pace. We can continue to protect the financial system while allowing families more flexibility to use online banking tools."
"CUNA is pleased that the House passed the Regulation D Study Act, legislation that will work to provide much needed financial regulatory relief," said Jim Nussle, President and CEO of CUNA. "CUNA testified on this issue before the House Financial Services Committee and sent letters of support to members of Congress because it is important for our 100 million credit union memberships. CUNA will continue to push for this and other important regulatory relief legislation to be taken up in the Senate before the year is out."
The legislation would require the study to include a history of how the Fed has used the rule as part of its monetary policy, what impact it has had on consumers and what alternatives might be available that would serve a similar function for the central bank. The House voted 422-0 in favor of the bill.