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Regulatory Roundup

Wednesday, April 1, 2009

Final Credit Card Rules Take Effect in 2010

Banks and other issuers of credit cards will have stricter rules governing “plastic” in 16 months. Two months ago, the Federal Reserve Board approved sweeping and comprehensive final rules that will prohibit certain unfair acts or practices and improving consumer disclosures.

The rules, which take effect July 1, 2010, are designed to:

  • protect consumers from unexpected interest changes,
  • forbid banks from imposing interest charges using the “two-cycle” billing method,
  • require that consumers get reasonable time to make credit-card payments,
  • limit fees that reduce the amount of available credit and
  • prohibit payment allocation methods that unfairly maximize interest charges.

More than 60,000 individuals and representatives of financial institutions commented in 2008 on the proposed changes.


Regulation AA (Unfair or Deceptive Acts or Practices)

Fed Changing Reserve Requirements in Spring

The Federal Reserve is changing Regulation D (Reserve Requirements of Depository Institutions) to authorize the establishment of limited purpose, or excess balance, accounts at Federal Reserve banks.

Excess balance accounts (EBA) will be intended for institutions eligible to receive earnings on their balances maintained at Federal Reserve banks. The establishment of such accounts would let participants earn interest at the excess balance rate in a Federal Reserve bank account managed by a correspondent or other agent, without participants having to open a separate individual account with the Fed.

The Board of Governors is authorizing EBAs to address pressures on correspondent-respondent business relationships in the current market environment. The Board will evaluate the continuing need for EBAs when more normal market functioning is restored.

Public comment just ended just as this issue was published. Final rules will be issued during the summer.


Regulation D (Reserve Requirements)