Academic journal article ABA Banking Journal


Academic journal article ABA Banking Journal


Article excerpt

ABA and other experts, coordinated by contributing editor Christine Walika, ABA federal regulatory representative, answer selected banker questions in this space Write on letterhead to: Steve Cocheo, ABA Compliance Mailbox, c/o ABA Banking Journal, 345 Hudson St, New York, N.Y. 10014. Or fax questions to (212) 633-1165

New Fair Credit Reporting Act Meets Deposits

Q. Under the new Fair Credit Reporting Act amendments, banks must provide consumers with adverse-action notices if they decline to open a deposit account based on a "deposit account" report. Do the amendments also require the bank to obtain the consumer's permission to obtain one of these reports?

A. No permission is needed. Banks may obtain consumer reports such as the ones related to deposit accounts if they have a legitimate business need for the information and it is obtained "in connection with a business transaction that is initiated by the consumer." Because the consumer applied for the account, the FCRA requirement is satisfied.

Favorable Rates on Employee Savings Mean Trouble

Q. We offer employees discounts on loans. Recently, we began considering offering a similar employee benefit for sayings deposits, which would pay a rate higher then that which we offer to the public. Are there any problems with this?

A. Yes, if your bank is a national bank and therefore a member of the Federal Reserve System. Section 22(e) of the Federal Reserve Act prohibits a member bank from paying any director, officer, attorney, or employee a greater rate of interest on deposits than that paid to other depositors on similar deposits with such member bank, according to Paul A. Smith, ABA's senior federal administrative counsel.

Obviously this applies to state chartered member banks--but what about state nonmember banks? …

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