Regulatory Comment: Availability of Funds and Collection of Checks

May 26, 2011

The Pew Health Group’s Safe Checking in the Electronic Age Project responds to the Board of Governors of the Federal Reserve System’s (“the Board”) call for comments on RIN No. 7100-AD68, Availability of Funds and Collection of Checks. The Board proposed amendments to rules designed to facilitate the transition to full-electronic check collection and return, revised the forms used to disclose funds availability policies, and requested comment on whether it should consider future changes to the regulation to improve the check collection system.

Based on research detailed in the April 2011 report,  “Hidden Risks: The Case for Safe and Transparent Checking Accounts,” The Pew Safe Checking in the Electronic Age Project had six specific recommendations related to this request for comment, briefly listed below:

  1. The Board should independently study the check processing system and reduce hold periods to as short a time period as current technology allows.
  2. Financial institutions should be required to post withdrawals made after hours the following business day and to post all transactions chronologically.
  3. The Board should require financial institutions to process all deposits made during normal business hours on the same day.
  4. The Board should mandate that The Pew Charitable Trusts’ disclosure box, which includes the funds availability schedule, be posted on banks’ Web sites, provided at account opening and on demand.
  5. Electronically-created items, like remotely created checks, should be covered by Regulation CC.
  6. The Project supports the Board’s recommendation to require electronic notice of extended holds on deposits.
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