Reg D Up For Review In Congress

The Federal Reserve’s Regulation D — which limits the number of monthly transactions customers can make with their savings accounts, including automatic payments — is getting a hard look from Congress, American Banker reported.

The House unanimously passed a bill on Tuesday (Dec. 2) that will require the Government Accountability Office to study the effects of Reg D in the age of online banking and ACH bill paying. The GAO study would include a history of how the Fed has used the rule as part of its monetary policy, the rule’s impact on consumers, and what alternatives would serve a similar function for the Fed.

The House voted 422-0 in favor of the bill, which suggests it’s likely to clear the Senate and become law.

Regulation D is intended to manage the nation’s money supply, and requires banks to hold reserves against certain types of deposits. However, it also limits depositors to six online transfers or automatic withdrawals per month for non-transaction accounts such as savings accounts. Going over that limit can result in surprise fees, including overdraft fees if a depositor links a savings and checking account.

The bill’s backers argue that the rule’s creators never envisioned modern online banking, and that the current Reg D restrictions benefits aren’t worth the loss of flexibility for consumers.