Customer comes in and wants to cash a check drawn on another bank. This customer only has a certificate of deposit account with us. Can we place a hold on a portion of his CD to cover us in case the check is returned for some reason? I'm assuming this isn't a Reg CC issue, since CDs do not fall under the regulation's coverage (i.e. - no notice required, no length of hold limits).

I don't see it as a Reg CC issue at all, but a contractual setoff rule. I'm unsure if a returned check when you have no DDA with them would allow setoff against a CD. Also, is setoff in your CD agreement, deposit agreement, other disclosures that were delivered and agreed to?

Yes, our contract gives us the right of set-off. I guess I was thinking if the customer comes in tomorrow and closes his CD and then the check comes back the next day - we'd have no account to set-off against. Just trying to make sure we're protected until we're sure the check is paid.