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#1398180 - 06/01/10 05:56 PM Extended Hold
Anonymous
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We have a customer that has agreed to having an indefinite hold placed on his checking account to ensure that overdrafts on his other accounts will be paid.

Since I was informed that we don't have this agreement in writing, my suggestion would be to exexcute an agreement ASAP to avoid a Reg CC violation.

Is this correct? Would the agreement be sufficient to avoid criticism from the regulator?

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#1398511 - 06/02/10 02:41 PM Re: Extended Hold Anonymous
Anonymous
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Why doesn't he just transfer the money into the account with the overdrafts?

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#1398954 - 06/03/10 12:12 PM Re: Extended Hold Anonymous
Anonymous
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Basically, there is a verbal agreement between the customer and the account officer. The agreement is to have a hard hold for a certain dollar amount as "insurance" for the account officer to pay into the overdrafts on the customer's other accounts.

The account that has the hard hold is a savings account but I have similar situations where the accounts are checking accounts. Also some of the holds are for about a week while others are for years.

The bank officer replied to my suggestion stating the customer will not sign such an agreement. The EVP is backing them up.

FYI, we apply Reg CC holds on our savings accounts and disclose as such.

I'm confused because technically we are not placing holds on deposits, we are placing holds on balances, so is there a Reg CC issue?

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#1399032 - 06/03/10 01:52 PM Re: Extended Hold Anonymous
Doug Hendrickson Offline
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Doug Hendrickson
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We hold funds in time deposit accounts pursuant to loan terms; this is not covered under Regulation CC, so we are okay on that point. However, as I said, it is pursuant to a loan agreement so that the customer has okayed the hold on those funds (usually for the term of the loan).

However, I've not heard of holding funds as 'insurance' for overdrafts and I'd also be concerned about the lack of a written agreement.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius

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#1399076 - 06/03/10 02:46 PM Re: Extended Hold Doug Hendrickson
Anonymous
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That's what I thought.

For whatever reason, the officer is refusing to execute a written memo as documentation.

My confusion still lies with whether or not Reg CC is applicable.

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#1399434 - 06/03/10 08:44 PM Re: Extended Hold Anonymous
EdieT Offline
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EdieT
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PA
My understanding is that Reg CC is not applicable to savings accounts.
Do you have the option of a Management hold instead of an Extended hold?

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#1401386 - 06/09/10 05:48 PM Re: Extended Hold EdieT
Pup Offline
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Reg CC deals with funds availability from deposited items. As Edie T pointed out, Reg CC does not apply to Savings Accounts (or Time Deposit accounts), but check your disclosures.

We place holds on accounts for "Collateral", but that is in a signed agreement.

Honestly, it sounds like you are protecting your customer from himself. Why not simply set up a sweep to cover overdrafts from the Savings account? Also, I might push for a signed request from the customer for the hold.

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