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January 17, 2012

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David

I second the motion; however, our reasons for requesting a regulatory change must make economic sense, not business sense. This is because the transaction limitations have to do with how the Fed measures liquidity in the money supply in order to make monetary policy. Simply erasing the limits poses a problem to Fed economists because it obfuscates the liquidity of savings deposits. At issue for financial institutions, and for the Fed, is that even with the transaction limitations, there are ways around them. This means that the Fed can't actually properly determine the liquidity of savings deposits. If our regulatory advocacy conversations revolve around this point, we will be more likely to effect a change in the reg.

Steve Van Beek

David,
Great points - thanks for the comments. One of the points I'll raise in tomorrow's blog post is how the Fed could exclude certain transactions from being "Reg D transactions."

The Fed already excludes transfers made to repay a loan at the same financial institution. If a transfer from savings to cover an overdraft from checking received the same treatment, there would be less confusion regarding Reg D.

Thanks again for the comments.

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