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#1272913 - 10/23/09 06:36 PM Reg CC Changes
VMack Offline
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Texas
Based on the fact that by early next year, there will no longer be any checks that are considered nonlocal, is anyone making changes to that effect now? It just seems that it not worth the hassle of trying to keep staff aware of the changing routing numbers.
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#1272917 - 10/23/09 06:38 PM Re: Reg CC Changes VMack
Skittles Offline
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We treat all holds as local items now, which does make it much easier. However, we don't really put on a lot of them.
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#1272925 - 10/23/09 06:43 PM Re: Reg CC Changes Skittles
VMack Offline
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Texas
So far this month we have placed 105 holds and of those, 75 are non-local checks. It looks like these checks are either insurance or credit card checks. I would like to go ahead and make the change, but fear we may not be protected as much as possible on some of those.
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#1273875 - 10/26/09 06:58 PM Re: Reg CC Changes VMack
Neytiri Offline
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You realize you can't single out a class of checks for holds - insurance and credit card checks. The hold should be based on the customer's account history & risk of loss to the bank not the type of check. We are only $85MM but I doubt we put that many holds on in a year. smile

Whether you go ahead and make everything local now depends on the number of returns you have. 99% of our returns are to businesses so we probably could go ahead and do all local but guess I'm a scaredy cat!

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#1273905 - 10/26/09 07:14 PM Re: Reg CC Changes Neytiri
VMack Offline
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Good point. Yes, I realize that and did not mean to make it sound like our hold policy includes a class of checks. My bank is over 2 billion. The more I think about it, the more inclined I am to go ahead and treat all hold items as local items. It would make life for everyone simpler! tired
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#1274499 - 10/27/09 12:20 PM Re: Reg CC Changes VMack
DonnaK Offline
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That is what we will be doing as well.

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#1274564 - 10/27/09 01:01 PM Re: Reg CC Changes VMack
Elwood P. Dowd Offline
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Next to Harvey
Mack,
I'm impressed that you have any statistical information regarding your hold practices. Most banks do not.

Within a few years of Reg CC's advent, there was a large bank in Arizona that actually analyzed their losses from deposited items relative to the holds they placed.

What they found is that they were putting holds on the wrong items; i.e. almost all of the items they held were paid on first presentment. Almost all of their losses came from items on which no hold was placed because there was nothing to suggest a hold was appropriate.

Who's to say what that type of analysis would yield today in a particular bank. Maybe the whole exercise is a simple waste of time?
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#1274752 - 10/27/09 02:21 PM Re: Reg CC Changes Elwood P. Dowd
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Management has decided that as of 1/1/10 we will start considering everything a local check, and will continue to only do case-by-case holds. Our deposit account disclosure brochure is being updated to reflect the 5-to-2 day and 11-to-7 day changes.

Is anyone aware if we need to disclose these changes to our customers? Our brochure vendor is telling us it's required.

Thanks!

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#1274851 - 10/27/09 03:12 PM Re: Reg CC Changes manimal
Kathleen O. Blanchard Offline

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Review Reg CC 229.18:

(e) Changes in policy. A bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank's availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation.
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#1274899 - 10/27/09 03:45 PM Re: Reg CC Changes Kathleen O. Blanchard
John Burnett Offline
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If your policy and practice is that you generally provide next day availability and place case-by-case and/or exception holds, your policy doesn't change, and you MAY have no notification requirement (see my post below).

If your disclosed policy is to hold check deposits for different numbers of days based on local/non-local status, with or without adding exception holds, you should have previously been providing depositors a disclosure telling them how to know what a local check is. In that case, this change to consider all check local (before you have to) is a change in policy that technically requires a notice no later than 30 days after implementation.
Last edited by John Burnett; 10/28/09 02:21 PM. Reason: to add "MAY"
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#1275049 - 10/27/09 04:58 PM Re: Reg CC Changes John Burnett
manimal Offline
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Thank you for all your help! It sounds like we will fall under the 'no policy change' category.

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#1275065 - 10/27/09 05:12 PM Re: Reg CC Changes manimal
Elwood P. Dowd Offline
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Apparently, your initial disclosure also talks about exception holds and says you may hold funds up to the eleventh day following the banking day of deposit. That will be incorrect sometime (presumably before March 31) next year. I understand that you intend to revise it accordingly.

Based on an abundance of caution, I would put out a statement message to the effect that the maximum hold period on deposited items is to the seventh day. Please understand, I do not think the notice is required by regulation either. It's just that it's a simple fix and I don't want to hear about it from the examiner who simply can't find anything else and carries this "violation" around from bank to bank for the next several months.

You may or may not revise the hold period you recite under the new account exception. The local vs. nonlocal distinction had no effect there unless you messed with the model language.


P.S. Never, take advice from a forms vendor.
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#1275702 - 10/28/09 01:17 PM Re: Reg CC Changes Elwood P. Dowd
manimal Offline
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That is correct, our current disclosure says that we generally give next-day availability, with up to a five-day hold for case-by-case and eleven-day holds for safeguard exceptions. These will be revised to two-day holds for case-by-case and seven-day holds for safeguard exceptions. Our vendor is still telling us we have to give notice to our customers because any change to our funds availability policy, even one that expedites the availability of funds, needs to be disclosed (like MSKaybee suggested above with 229.18).

You may have a point with just using an abundance of caution and giving notice to our customers. Thank you for your insight!
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#1275809 - 10/28/09 02:19 PM Re: Reg CC Changes manimal
John Burnett Offline
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Well, there is an argument that if your disclosures provide for holds of 5 days or 11 days, you have a notice need. Take a look at model forms C2 and C3 in Appendix C of the regulation and see if your disclosures read like them. If your disclosure says you might hold funds as long as 11 days, you'll need to change them and notify existing customers.

Also check out your lobby, new accounts desk or teller line Funds Availability Policy notice to see if it needs changing.
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#1275867 - 10/28/09 02:57 PM Re: Reg CC Changes John Burnett
Irishguy Offline
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John....if our disclosures read like the model form C3 in the appendix, we will need to redisclose because it references the fact that funds may not be available until the 5th business day after the day of a made deposit. Correct?

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#1276196 - 10/28/09 06:01 PM Re: Reg CC Changes Irishguy
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If we put a message at the bottom of all our statements saying "the maximum hold time is 7 business days on any check" would this satisfy the requirement to notify customers?
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#1278358 - 11/02/09 04:52 PM Re: Reg CC Changes mstark
Funky Falcon Offline
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bump - I was wondering that too...

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#1278364 - 11/02/09 04:58 PM Re: Reg CC Changes Funky Falcon
John Burnett Offline
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Such a notice might be adequate depending on what you have disclosed relative to holds in the past. For example, do you mention "5th business day" anywhere in your disclosure to describe a holds you place routinely or on a case-by-case basis?

Don't forget to review your summary disclosure posted in your lobby or in your teller area.
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#1279263 - 11/03/09 05:34 PM Re: Reg CC Changes John Burnett
AllSmiles Offline
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John, we are a small bank with one branch. We mail ALL statements on the first of the month. We wanted to put the notice on the November statements but we missed the deadline for mailing. Can we include the notice on our December 1st statements with an effective date of October 16th?
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#1279773 - 11/03/09 09:37 PM Re: Reg CC Changes Elwood P. Dowd
Milby Offline
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Originally Posted By: Ken_Pegasus
P.S. Never, take advice from a forms vendor.
THANK YOU! Finally someone else understands that WKFS is not a source for regulatory compliance. They are a sales force trying to sell us pre-printed, unnecessary disclosures. I am so sick of their emails giving advice about what I should send to my customers. Unfortunately, they have done an effective job of making many bankers believe their word is gospel.

For what it's worth, I have asked our executives to begin treating all checks as local. We are in 8 states now, so our definiation of "local" has been changing rapidly anyway. Much easier to get ahead of this curve (something I've been preaching since 2007). We'll see

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#1279778 - 11/03/09 09:39 PM Re: Reg CC Changes AllSmiles
John Burnett Offline
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Originally Posted By: AllSmiles
John, we are a small bank with one branch. We mail ALL statements on the first of the month. We wanted to put the notice on the November statements but we missed the deadline for mailing. Can we include the notice on our December 1st statements with an effective date of October 16th?


1. It is a low risk violation, at worst, and some would argue it's not even required.

2. Better late than never.
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#1279789 - 11/03/09 09:45 PM Re: Reg CC Changes John Burnett
AllSmiles Offline
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I'll go with #2.
Thank you!

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#1284173 - 11/10/09 03:19 PM Re: Reg CC Changes AllSmiles
DD Regs Offline
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Somewhere in the middle
We currently treat "State or Local Government Checks ONLY when located in our local processing region," as "Next Day Items". Since everything will be in our "Local Processing Region" as everything will become local, does this option go away?

Any thoughts or research available on this? Anyone else have similar practice?
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#1284179 - 11/10/09 03:28 PM Re: Reg CC Changes DD Regs
Elwood P. Dowd Offline
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Here's how the reg describes these "next day availability" items:

(iv) A check drawn by a state or a unit of general local government and deposited--
(A) In an account held by a payee of the check;
(B) In a depositary bank located in the state that issued the check, or the same state as the unit of general local government that issued the check; [abridged]


The reference is to the state, not the check processing region. Depending on the circumstance, your practice may have been more or less liberal than the regulation requires. You're going to need to do some retraining, but I do not see how consolidation of the check processing regions affects this language.
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#1284199 - 11/10/09 03:44 PM Re: Reg CC Changes DD Regs
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Somewhere in the middle
Reading my question and thinking more about it, I think it would be appropriate to say a local Gov't check would be a check drawn in a state that we operate, instead of relying on the routing number.

Anyone else interpret local govt checks that way?

(Thanks Ken, you were typing your response as i was thinking on my post)
Last edited by DD Regs; 11/10/09 03:46 PM.
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