Date: 1985-05-08
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. the dispensing of financial services on a iessonable and equitable basis should be the goal of all depository institutions. whether chartered by the Federal Government or State governments. New York and California have taken the lead in trying to establish rational criteria for the clearing of checks and to assure that consumers have access to their funds as soon as possible. Those States are trying to eliminate the long delayssometimes running into weekswhich have frustrated consumers throughout the Nation. The efforts of California and New York are commendable. but their legislation applies only to Statechartered depository institutions. The legislation I am Introducing today along with 21 of my colleagues will require that all depository institutions regardless of charter status make deposited funds available to customers on an expedited basis. Mr. Speaker. the legislation I am introducing today. the Expedited Funds Availability Act. parallels the bill I introduced last year to deal with the delayed funds problem and incorporates important safeguards reflected In what New York and California have done. Last years bill. you recall. was cosponsored by 129 of our House colleagues. Mr. Speaker. the Expedited Funds Availability Act is in part necessitated by inaction and obstruction from Federal financial regulatory agencies. Last year. the Federal Home Loan Bank Board. acting through its general counsel. informed federally chartered thrifts In New York that they need not comply with the New York State law designed to give consumers quicker access to their deposits. In addition. in February of this year. the National Credit Union Administration promulgated a final rule preempting State initiatives such as those In New York and California. This .final rule not only Involved expedited funds availability. but also included disclosures. fees. and other matters as well. Both the FHLBB and the NCUA pointed to the ageold preemption of Federal law for institutions chartered by the Federal Government. Mr. Speaker. I question why the Federal Home Loan Bank Board. and other Federal supervisors. have not led the way in eliminating or reducing the onerousthe outlandishly longdelays required before most checks are cleared and credited to a customers account. In some cases. the delaystechnically the floatstretch into weeks. A frustrating experience. and at times an experience that results in severe problems for consumers. particularly low- and middleincome families who do not have the luxury of waiting weeks for their money. While the depository institutions hold the deposit uncredited. the customer writes checksmany of which get marked insufficient funds and socked with a $10. $15. $20 fee. All the while. the financial institution refuses to post the deposit. which is often hundreds of dollars in excess of the insufficient fund Items. On the one hand. the Institution has use of the floata profitable itemand at the same time collects a little extra in the form of returned check fees from the customer. An allwin solution for the institutions. a sure loser for the customer. Mr. Speaker. over the years I have tried repeatedly to call attention to this problem in hopes that we would see some action by the supervisory agencies in support of the consumer. The Federal Reserve is attempting to coordinate an approach with other agencies. While I welcome the Federal Reserves limited response to my efforts. It is simply not enough. New York and California have moved in a definitive fashion to reduce the delay in availability of funds. and the only answer from the Federal agencies has been to trot out the preemption issue. Again I acknowledge the legal scholarship. but I deplore the lack of creativity. the lack of action. the lack of concern which could make the preemption issue moot in this Instance. Mr. Speaker. last year 129 of our colleagues joined me in my effort to halt checkholdsthe practice of delaying customers use of their deposited funds for a week or more. As I introduce similar legislation today. I ask them to assist me once again and hope that more of our colleagues will do the same. With such a combined effort. perhaps we can finally put an end to this anticonsumer practice. A sectionbysection of the Expedited Funds Availability Act follows.