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4000 - Advisory Opinions


Limitation on the Amount of Overdrafts in a Single Account Pursuant to Regulation 0

FDIC-87-42

November 30, 1987

Claude A. Rollin, Attorney

Your letter of October 28, 1987 to FDIC Regional Counsel William M. Lloyd has been referred to me for a response.

In your letter, you ask for our interpretation of the language in section 215.4(d) of the Federal Reserve Board's Regulation 0, 12 C.F.R. §  215.4(d). More specifically, you ask for a clarification of the exception to the general prohibition of that section which reads, in relevant part, as follows: "[t]his prohibition does not apply to payment of inadvertent overdrafts on an account in the aggregate amount of $1,000 or less. . . ." 12 C.F.R. § 215.4(d). You suggest that the inclusion of the word "aggregate'' in this sentence means that a bank should consider the balances in all accounts that an officer or director may have at the bank in determining whether an overdraft exists.

We do not agree that section 215.4(d) can be reasonably interpreted in the manner which you suggest. The term "aggregate" clearly relates to the term "overdrafts" which precedes it. Moreover, the fact that the provision explicitly refers to a single account ("an account") rather than multiple accounts, seems to preclude the interpretation which you suggest. For these reasons, we conclude that the sentence in question can only be interpreted to mean that all overdrafts in a single account of an officer or director must be added together and the total of those overdrafts cannot exceed $1,000.00.

Please be advised that this opinion is consistent with that expressed by the legal staff of the Washington, D.C. office of the Federal Reserve Board.


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