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Fed to alter payment system risk policy for all in 2011
WASHINGTON (6/29/10)—The Federal Reserve on Monday announced that it will revise its Payment System Risk (PSR) policy for all depository institutions in 2011. The PSR policy revisions, which were adopted by the Fed in 2008, will “encourage financial institutions “to pledge collateral to cover daylight overdrafts by providing collateralized daylight overdrafts at a zero fee and by raising the fee for uncollateralized daylight overdrafts to 50 basis points (bp),” according to a Fed release. A daylight overdraft is a negative balance in an institution’s Federal Reserve account at any time during the Fedwire operating day. The PSR was revised to improve intraday liquidity, operational, and credit risks in the wholesale payment system. According to the Fed, financial institutions that may incur daylight overdraft fees will be required to adopt net debit caps, which are daily ceilings on their total daylight overdraft positions. Under the Fed’s changes, biweekly daylight overdraft fee waivers will also increase from $25 to $150, and the penalty fee for institutions without regular access to the discount window will increase from 136 bp to 150 bp. The exact implementation date for these policy changes will be announced 90 days in advance, the Fed added. For the Fed release, use the resource link.
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