FRB: Proposed Rule to Encourage Electronic Check Clearance and Return

ABA Contact: Nessa Feddis
Published Proposal: 76 Federal Register 16862; March 25, 2011
Comments Due: June 3, 2011
Disposition: Filed

Summary of the Proposed Rule

The Federal Reserve on March 3 proposed a rule that would amend Regulation CC (Availability of Funds and Collection of Checks) to encourage banks to clear and return checks electronically, add provisions governing electronic items cleared through the check-collection system, and shorten the "exception" hold periods on deposited funds. Under the proposal, banks would be entitled to the expeditious return of checks only if they agreed to receive them electronically. It also would permit banks responsible for paying checks to require that they be presented for same-day settlement electronically. The safe-harbor period for an exception-hold would be shortened to four business days under the proposal, and Reg CC references to "nonlocal" checks would be eliminated.

The Dodd Frank Act contains a provision amending the Expedited Funds Availability Act (Regulation CC) that — effective July 21, 2011 — requires banks to make $200 available for withdrawal on the business day after a deposit. Banks currently must make $100 available on the business day after a deposit. The Federal Reserve on March 3 released comprehensive changes to update Regulation CC, but those provisions are independent of the Dodd-Frank provisions and are unlikely to be finalized by the July 21 effective date of the increased-amount availability change. Read the Fed's press release.