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Regulation O - Overdrafts on Insider Accounts
Answer by John Burnett, BOL Guru
Guru Bio
Question: Is it a violation of Reg O if an NSF check is posted against an insider’s account with insufficient funds (for more than $1000) and the process for reviewing/returning or paying these NSF items happens the morning after the item was posted to the account? The insider's account statement would show one day overdrawn for greater than $1000.
Answer: No, it would not be a problem if the appropriate actions were taken on posting date plus one. Appropriate action would include bouncing the check, transferring funds under a standing auto-transfer agreement or covering from a overdraft line of credit, for example. A covering deposit of collected funds to cure the overdraft on posting date plus one would also be acceptable.
First published on BankersOnline.com 5/05/08
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