Reg CC "No Problem"-Who's Kidding Who?!
I just read an article in the AMERICAN BANKER that said that Regulation CC had "little to no impact", according to a poll done by Trans Data Corporation. They made calls to 381 banks and interviewed the top executives to gather opinions and draw conclusions.
Back in 1987, when we first started to put together a program to take nationwide explaining Reg CC at all day seminars, I protested the session's aim. We were putting the material together for the chief executives, the presidents, and top officers of the financial institutions. I maintained then (and still do now) that the problem with Reg CC was not going to be in the administrative offices. It was going to be on the front line.
Trans Data's survey proves my point. There is no problem with Reg CC in the administrative offices. But there sure is in other parts of the financial institutions!
I did my own unofficial survey by calling head tellers and managers across the country, and by asking questions at seminars I have given during the past year, and my findings are completely different. Reg CC IS a problem out in the face-to-face area of our institutions. To say nothing of the return items area.
Losses are starting to occur because of kiting-but are being charged off as overdrafts, and hidden from the "fraud-loss" category. New account holds, possible by law, are being utilized by a very small percentage of institutions-because, although we have the right to hold deposits, most of our computer systems don't have the capability. Or because the right and the technique are unknown to the new accounts clerk.
Misunderstanding of exception holds, or of off-set, is causing risk and losses where they should not occur. And, when the final phase of Reg CC goes into effect on September l of this year, we will be at even more risk.
There has been a breakdown of communications in this industry for years. It's one of the reasons we started this newsletter.
When we learn to talk to each other-and listen to each other, the results of surveys such as these will be more accurate.
Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 1, 1/90
First published on 01/01/1990