Topic: Dodd-Frank Act
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It is my understanding that a church can open a NOW account. Can it also open an interest-bearing checking account?
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Yes, a church may open an interest-bearing checking account. We are not aware of any ownership restrictions on interest-bearing checking accounts. Although the former Regulation Q prohibited the payment of interest on demand deposit accounts, this prohibition was repealed by the Dodd-Frank Act in 2011. Also, you are correct that a nonprofit organization that is…
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Can you confirm that the prohibition against offering interest-bearing business checking accounts has been repealed? Also, are businesses eligible for NOW accounts?
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Yes, you are correct that the prohibition against paying interest on business checking accounts has been repealed. The Dodd-Frank Act eliminated Regulation Q’s prohibition against paying interest on business demand deposit accounts as of July 21, 2011. However, for-profit businesses generally are prohibited from maintaining NOW accounts, since they do not meet the criteria for…
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We have a customer who would like to convert his business checking account into an interest-bearing account. Is this possible? Also, are businesses still prohibited from earning interest in a NOW account?
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Yes, we believe that you can convert a business checking account into an interest-bearing demand deposit account. The Dodd-Frank Act eliminated Regulation Q’s prohibition on paying interest on commercial deposit accounts, and we are not aware of any prohibition on converting from one account type to another. However, for-profit businesses generally are prohibited from opening…
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Our bank does not offer a business checking account that pays interest. However, we would like to create a checking account that pays monthly interest for a commercial customer that is a property manager. Are there any restrictions we need to be aware of, and would we need to offer this product to other customers? The customer would open separate accounts for the various properties it manages and would be holding funds related to the properties.
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We are not aware of any Illinois or federal law prohibiting a bank from offering higher deposit interest rates to a particular business customer, provided that the customer is not a bank insider. The Dodd-Frank Act removed the prohibition on paying interest on ordinary demand deposit accounts held by businesses, and since this commercial customer…
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Can we set up an individual checking account for a large business customer? Can we pay a higher interest rate for this particular customer? Do we have to offer the interest rate to every customer?
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Yes, banks may offer interest-bearing checking accounts to businesses. The Dodd-Frank Act removed the prohibition on paying interest on ordinary demand deposit accounts held by businesses. We are not aware of any Illinois or federal laws prohibiting a bank from offering higher deposit interest rates to a particular business customer, provided that the customer is…
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Can we convert a NOW account to an interest bearing demand deposit account?
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Yes, we believe that you can convert a NOW account to an interest bearing demand deposit account. We are not aware of any prohibition on converting from one account type to another (including business accounts in the wake of Dodd-Frank’s elimination of Regulation Q’s prohibition on paying interest on commercial deposit accounts). However, you are…
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Can a business open an interest bearing checking account?
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Yes a business may hold an interest bearing checking account. The Dodd-Frank Act removed the prohibition on paying interest on ordinary demand deposit accounts held by businesses, and that provision has been in effect since July 21, 2011. For resources related to our guidance, please see: FDIC Final Rule, Interest on Deposits, 76 Fed. Reg. 41392 (July 14,…
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Is it legal for a broker who does not have an appraiser license to produce a written opinion regarding the market value of a particular property? Is it compliant to rely on broker price opinions as a valuation for a real estate transaction? Are there any restrictions on using broker price opinions?
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We do not believe a broker price opinion can form the basis for establishing a property’s “market value.” In other words, even if a broker price opinion purports to state a property’s market value, that opinion may not be relied upon in lieu of an appraisal or evaluation when financing a real estate transaction. Federal…
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Currently, we reconcile all deposit discrepancies. Our consultants have recommended that we establish a $5 threshold for reconciling out-of-balance deposits. Is that an acceptable threshold? What if we apply the threshold only when the error is in the customer’s favor?
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We believe that you should resolve all deposit discrepancies that could harm a consumer, without applying a $5 threshold. We read the Interagency Guidance on Deposit Reconciliation Practices as recommending that banks resolve all deposit discrepancies that would harm consumers. The guidance does not sanction applying a threshold before reconciling a deposit discrepancy; in fact,…
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Did the federal Protecting Tenants at Foreclosure law expire on December 31, 2014? We realize the Illinois law is still in place, so how should we update our policy and procedures?
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Yes, the Protecting Tenants at Foreclosure Act of 2009 expired on December 31, 2014. See the notes to 12 USC 5220