[Code of Federal Regulations]
[Title 12, Volume 2, Parts 200 to 219]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR204.7]

[Page 109]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D)--Table of Contents
 
Sec. 204.7  Penalties.

    (a) Charges for deficiencies--(1) Assessment of charges. 
Deficiencies in a depository institution's required reserve balance, 
after application of the carryover provided in Sec. 204.3(h) are subject 
to reserve deficiency charges. Federal Reserve Banks are authorized to 
assess charges for deficiencies in required reserves at a rate of 2 
percent per year above the lowest rate in effect for borrowings from the 
Federal Reserve Bank on the first day of the calendar month in which the 
deficiencies occurred. Charges shall be assessed on the basis of daily 
average deficiencies during each maintenance period. Reserve Banks may, 
as an alternative to levying monetary charges, after consideration of 
the circumstances involved, permit a depository institution to eliminate 
deficiencies in its required reserve balance by maintaining additional 
reserves during subsequent reserve maintenance periods.
    (2) Waivers. (i) Reserve Banks may waive the charges for reserve 
deficiencies except when the deficiency arises out of a depository 
institution's gross negligence or conduct that is inconsistent with the 
principles and purposes of reserve requirements. Each Reserve Bank has 
adopted guidelines that provide for waivers of small charges. The 
guidelines also provide for waiving the charge once during a two-year 
period for any deficiency that does not exceed a certain percentage of 
the depository institution's required reserves. Decisions by Reserve 
Banks to waive charges in other situations are based on an evaluation of 
the circumstances in each individual case and the depository 
institution's reserve maintenance record. If a depository institution 
has demonstrated a lack of due regard for the proper maintenance of 
required reserves, the Reserve Bank may decline to exercise the waiver 
privilege and assess all charges regardless of amount or reason for the 
deficiency.
    (ii) In individual cases, where a federal supervisory authority 
waives a liquidity requirement, or waives the penalty for failing to 
satisfy a liquidity requirement, the Reserve Bank in the District where 
the involved depository institution is located shall waive the reserve 
requirement imposed under this part for such depository institution when 
requested by the federal supervisory authority involved.
    (b) Penalties for Violations. Violations of this part may be subject 
to assessment of civil money penalties by the Board under authority of 
section 19(1) of the Federal Reserve Act (12 U.S.C 505) as implemented 
in 12 CFR part 263. In addition, the Board and any other Federal 
financial institution supervisory authority may enforce this part with 
respect to depository institutions subject to their jurisdiction under 
authority conferred by law to undertake cease and desist proceedings.

[44 FR 56018, Aug. 22, 1980, as amended at 56 FR 15495, Apr. 17, 1991; 
61 FR 69025, Dec. 31, 1996]