FOR IMMEDIATE RELEASE
Key ICBA Recommendation Included in Fed’s Regulation D Proposal
Washington, D.C. (January 30, 2009)—Karen Thomas, executive vice president of government relations for the Independent Community Bankers of America (ICBA), issued this statement following the Federal Reserve Board’s announcement to modify the Reserve Requirements of Depository Institutions regulation and establish new excess balance accounts (EBAs).
“ICBA greatly appreciates the Federal Reserve Board’s action to address the unintended negative consequences of accelerated payment of interest on reserves in light of the turbulent financial markets faced by correspondent banks that serve over 6,000 of our nation’s community banks. This action will allow correspondent banks to continue serving their community bank respondents. The proposed new accounts, consistent with ICBA’s request, would permit bankers’ banks and other correspondent banks to deposit overnight, aggregated respondent excess funds with Reserve Banks and pass back the proportional interest to their respondents. Community banks that establish EBAs would be able to earn the rate of interest paid by Reserve Banks on excess balances without disrupting established relationships with bankers’ banks and other correspondent institutions.
“ICBA is pleased our recommendation is included in the Fed’s Regulation D proposal and looks forward to approval of the new rule.”