This questions is in conjunction with the Federal Reserve press release issued this morning regarding the final steps in consolidating check processing regions. The Press Release indicates that effective first quarter 2010 there will be only check processing region. It also indicates that there will no longer be any checks that would be considred nonlocal for reg. CC purposes.

If a bank is a same day availability institution that places case-by-case and exception holds are there change in terms requirements to notify customers?


Lori

No - you don't tell them (if you use the model disclosures) anything about local and non-local checks, so there is nothing to redisclose.

If you're in any of the affected processing regions, though, you will have to get current R/T number listings to your staff members who place holds so they know that "local" is so much more than it was.

An article from Compliance Headquarters says:

The article points out the following:
The move to a single paper check-processing region means there will no longer be nonlocal checks. This will affect more than just those institutions with delayed funds availability policies (who are obviously affected because they can no longer use the 2-day/5-day availability provided by the local/nonlocal check distinction). It will also have an affect on most institutions with immediate, same-day, or next-day availability policies. That’s because most institutions with immediate, same-day, or next-day policies also provide for the ability to hold checks on either a case-by-case basis or by using a safeguard exception (sometimes referred to as "special exception"). Institutions that reserve the right to use a case-by-case or safeguard exception hold are required to include that information, including the maximum hold period, in their initial funds availability disclosure. Currently, those hold periods are disclosed based on the time period for nonlocal checks. With nonlocal checks going away, those institutions will need to update their disclosures and send change notices to affected consumers explaining the new rules.

It's online here: The Demise of Nonlocal Checks

I don't quite understand this article. We give next-day availability and disclose that we may delay availability on a case-by-case basis based on the exceptions. We disclose that those deposits will generally be available within seven business days. We make no mention of local or non-local checks. I didn't think we would need to change our policy or our disclosure, but this article seems to say we will.

If you use seven days in that disclosure, you are fine, IMO. You'll still be able to go to seven days after all checks are considered local. If your disclosure had said eleven days (which would be accurate today, but not after you have no more non-local checks), you'd have to consider change in terms notices.

Thanks, John. The article didn't give specific examples but made it sound like the changes would require everyone to redisclose and send change in terms notices. I guess it had the intended effect; I read it and questioned our policy and disclosures.

The FRB just issued a press release about the consolidation of the third (FRB of Philadelphia) and fourth districts (FRB of Cleveland). http://www.federalreserve.gov/newsevents/press/bcreg/20091106a.htm

The changes are effective 12/12/09.

Our disclosures read 5 days and 7 days. I don't belive this will change. Correct?
Depending on the type of check that you deposit, funds may not be available until the fifth business day after the day of your deposit. However the first $100 of your deposits will be available on the first business day.
We will notify you if we delay your ability to withdraw funds for any of these reasons, and we will tell you when the funds will be available. They will generally be available no later than the seventh business day after the day of your deposit.
Also, I believe the lobby signs will remain at 5 days?

The "5" is a reference to a case by case hold on a nonlocal check. That will be a "2" when nonlocal checks cease to exist.

Thank you very much!