Working Days, Business Days, and Reg Z

by Mary Beth Guard, BOL Guru

Question: I want to get something straight. For purposes of Reg Z, Saturday is not a business day, correct? Our bank is not open for business on Saturday. Sunday and legal holidays are not business days either, correct? There is some confusion. It is no longer connected with the days the post office operates for mailing the written rescission, correct?

Answer: The term "business day" means two different things under Regulation Z. For "normal" purposes, the term "business day" means "a day on which the creditor's offices are open to the public for carrying on substantially all of its business functions."

That would mean that for most banks, Saturday is not a business day because even though a bank's drive-through may be open, typically its back-room functions are not operational on Saturday.

For purposes of calculating the rescission period, however, there is a DIFFERENT definition. Saturday IS a business day for rescission purposes. The regulation states that, for purposes of rescission, "business day" means all calendar days except l) Sundays; and 2) the federal legal holidays listed in 5 U.S.C. Section 6103(a).

It used to be that if the post office was closed, the day wouldn't count as a business day for purposes of the right of rescission. The recently revised Reg Z Commentary has made it impossible to rely on that old rule. Under the revised Commentary, if any of the four date-specific holidays (Christmas, 4th of July, Veteran's Day, New Year's Day) fall on a weekend, only the date specified in the statute is considered a legal holiday, even if government offices are closed on the previous Friday or the following Monday to observe the holiday. In other words, you count those four days as a legal holiday on their actual dates. If one of those date-specific holidays falls on a Sunday, the holiday has no effect because Sundays are already not business days. If the holiday falls on a Saturday and results in the post office closing on another day (such as Monday or Friday), you only treat Saturday as the holiday - not the day the post office is closed. On years when these holidays fall on a Sunday, you end up with fewer days in the year that are not counted for the right of rescission.

The original version appeared in the June 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 11/25/02