Opinion ID: 507225
Heading Depth: 2
Heading Rank: 1

Heading: The Clearing House System as it Relates to this Case

Text: 6 All checks drawn on accounts established with Societe Generale in New York must be processed through the New York Clearing House (clearing house) system. When a check drawn on a Societe Generale account arrives at the clearing house for payment, Citibank, Societe Generale's clearing bank, pays the check and debits Societe Generale's account by that amount. Citibank does this automatically, without considering the status of the account on which the check is drawn. 3 7 If there are insufficient funds to cover a check drawn on the account, the payment of the check automatically creates an overdraft on paper. In reality, however, Societe Generale has taken no action regarding the check at this point. Societe Generale actually has until noon of the following business day to inform the clearing house whether it will honor or return the check. 4 Societe Generale's internal rules require account officers to reach a decision by 10 a.m., so that it can meet the clearing house's noon deadline. 8