WASHINGTON (10/14/08)—The Credit Union National Association (CUNA) is seeking comment on two recent, unrelated proposals: the Federal Reserve Board’s plan to pay interest on depository institutions’ required and excess reserve balances; and proposed guidelines from the Office of Foreign Assets Control (OFAC) for enforcement of its economic sanctions. Although it was the Financial Services Regulatory Relief Act of 2006 that originally authorized the Fed to begin paying interest on balances held by or on behalf of depository institutions, the 2008 Emergency Economic Stabilization Act moved the effective date up three years from Oct. 1, 2011. The Fed will pay interest on average balances maintained over the reserve maintenance periods as of Oct. 9 this year. In its Comment Call, CUNA noted such details as:
* The initial rate of interest for required reserve balances will be the average targeted federal funds rate over the reserve maintenance period less 10 basis points; * The interest rate for excess balances will be the lowest targeted federal funds rate during the reserve maintenance period less 75 basis points; and * Interest will be paid on correspondent balances, which does not have to be passed back to the respondent.
CUNA requests that comments be sent by Nov. 1; they are due to the Fed Nov. 21. Regarding the OFAC proposal, the guidelines reflect factors that will be considered in determining the appropriate enforcement response to any apparent violation of an OFAC sanctions program. The guidelines identify enforcement actions that OFAC may take and list “general factors” that will be considered in determining both enforcement action and penalty amount. The interim final rule supersedes all previous guidance issued by OFAC, and applies to all persons and entities subject to any of the sanctions programs administered by OFAC. For more on each regulatory plan, and to read CUNA’s complete Comment Calls, use the resource links below.