Date: 1984-03-29
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. I have today introduced legislation which would require depository institutions to give customers quick access to their deposits. We want to put an end to the outrageously long periods of delay in clearing and crediting checks to assure that American consumers have quick access to theit own funds. The committee has receved reports of customers denied access to funds for 2 and S weeks with even U.S. Government checks facing delays. These delaysfloat in the parlance of bankingare profitable to financial institutions and a heavy burden on customers. particularly the elderly. working families and small businesses needing early access to their funds. My bill would establish four rategories of deposits and would set a maximum number of days for clearance of checks for each: Catego y 1: No more than I business day between deposit and availability of funds on checks of $100 or less. checks drawn on a branch of the same institution receiving the deposit. and oneparty checks drawn on governmental entities. Category II: No more than 8 business days on checks drawn on institutions in the same city or local region as the receiving depository. Category III: No more than 4 days for checks drawn on nonlocal institutions in the same State. Category IV: Not more than 8 days for checks drawn on outofState institut ions. The maximum time limits for clearing checks will remain in effect until the Federal Reserve develops a checkclearing system which will provide nextday access for local checks and a maximum of 3 days for nonlocal checks. The bill mandates that the Federal Reserve develop the faster system within 5 years. The bill also requires the depository institutions to disclose their checkclearing policies to their customers in writing and by posting notices prominently within the lobbies of the institutions. I have scheduled hearings on the funds availability issue for Wednesday. April 4. I include the following summary with my statement: SECTIONbySECTION ANALYsIs or EXPEDITED FuNos AVAILABILITY AcT SECTION 1. Prescribes the Acts short title. SEc. 2. States the findings and purposes of the Act. Sac. U. Requires the Pederl Reserve to develop a system I no longer than five years from the date of encsmaent that would cause all checks to be cleared so that funds would be available for withdrawal the next business day after the day of deposit at local institutions. and for nonlocal institutions. not more than three business days would Intervene between the day of deposit and the day of availability of the funds for withdrawal. The Federal Reserve should consider. among other things. establishing a uniform endorsement standard. and a system for expedited notice of nonpayment of a check to the receiving depository Institution. The Federal Reserve would report within six months. and annually thereafter. on progress toward the goal. SEc. 4. Establishes specific time limits for funds availability for types of deposits made by check. These limits would be in effect while the system described in Section 8 Is being developed. The limits are: (1) One business day between day of deposit and day of availability for checks of $100 or less. checks drawn on branches of the receiving depository institution. cashiers checks und certified checks. and U.S. Treasury. State and local government checks endorsed only by the person to whom the check is issued. (2) Not more than three business days between day of deposit and day of availability for checks drawn on local depository institutions (i.e.. institutions with an office in the same city. town or village or. if designated by the Federal Reserve. in the same local region of metropolitan area. as the receiving depository institution). (3) Not more than four business days between day of deposit and dayofavailability for checks drawn on nonlocal depository institutions in the same State as the receiving depository institution. and (4) Not more than eight business days between day of deposit and day of availability for checks drawn on depository institutions outside the State of the receiving depository institution. Deposits made on Saturdays. Sundays. holidays or after business hours are deemed made on the next business day. The Federal Reserve is given regulatory authority to shorten the time periods specified above. Sac. 6. Provides an exception to the maximum limits in Section 4. Checks drawn on depository instItutions outside the United States would be subject to the receiving depository institutions availability policy. Sc. 6. Preserves the authority of States to enact laws. and of individual depository institutions to prescribe policies. to make funds available more quickly than the time periods prescribed in this Act or In Federal Reserve regulations. SEC. 7. Requires depository institutions to disclose their funds availability policies in writing to new customers. on deposit slips or by specific notice when deposits are made. in mailings to established customers. and by posting of notices in locations where deposIts are taken. SEc. 8. Authorizes the Federal Reserve to publish optional model disclosure forms and clauses. SEc. 9. Permits the Federal Reserve to proniulgate regulations to carry out the Act. Sxc. 10. Establishes enforcement arrangements under existing law. to be carried out by the federal regulators of depository institut ions. Sc. 11. Provides civil liability penalties for individual and class actions for violations of the Act. Suc. 12. Prescribes definitions applicable to the Act. Mnk* I. IDI4 ao Sol. 18. Btabishe effootive dates for the Act. The Federal Reserve Is to begin westIng toward Ite five ear goals starting on the date of enactment. The interin maximum time limits presoribed in the Act. the disolesure requirements. and the enforcement provisions take effect 90 days after enactment. H.R. 5801 A bill to limit the number of days a deposi. tory institution may restrict the avilability of funds which are deposited by check Be " enacted by the Senate and House of Representatives of the United States of America in Congress uasmbled.