The OCC cited us for the following: when a customer split deposits a non-local check & gets $100 back at the time of deposit, we do not give an add'l $100 availability the next day. I cited comment #5d in the OSC to 12 CFR 229. Our external auditor did, too. The EIC said that since this OSC is silent as to local checks, the same reasoning can't be applied. Comments, advice, correction?

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[This message has been edited by complyguy (edited 05-24-2001).]

[This message has been edited by complyguy (edited 05-24-2001).]

I have this with the first post I read in the E-banking area. But this is more appropriate.

I hate Reg. CC and will choose to have root canal before taking charge of it again. So I can't speak to the attributes of CC.
While I believe you are smart to choose your battles, if this is a big issue and it will continue to be so, ask the EIC for verification. While the ombudsman is an option, I have always been told it is fine with the regulators on-site if you want to go that route. While they sounded genuine, that may the required talk-off.

But you should feel free to question the EIC. Just as we have this forum to use, they have one in which regulators share ideas. Have it queried there. The EIC should be receptive to gathering a second opinion unless they are absolutely sure of their position.

And if you continue to question it and forsee costs or repeat violations, go to the ombudsman.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Am I missing something - or has the basic rule of Reg CC been ignored - i.e. - $100 of the total deposits of local and non-local checks in one day must be made available.

The $100 can be made available by cash back the same day OR by being made available the next day. If you give a customer $100 cash back from the deposit and then make another $100 available the next day, then you have made $200 available from all of the previous day's deposit.

A customer cannot circumvent Reg CC by making separate $100 deposits all the same day and expect to have the entire amount available. What a boon that would be to kiters and con artists everywhere!

Go back to the basic regulation - 229.10(c)(1)(vii) (A) & (B) - A depositary bank shall make funds deposited in an account by check available for withdrawal not later than the business day after the banking day on which the funds are deposited, in the case of -
(vii) the LESSER of -
(A) $100
(b) The aggregate amount deposited on any one banking day to all accounts of the customer by check or checks not subject to next-day availability under paragraphs (c)(1)(i) through (vi) of this section.

The OSC for 229.10 #5 c says that the bank may aggregate all local and non-local check deposits made by the customer on any given banking day for the purposes of the $100 next-day availability rule.

IMHO - the examiner is taking too narrow a read on the staff commentary in the interpretation that a customer can get $100 cash back from a local check AND $100 next day from a non-local check.

I cannot believe the Fed would put banks in a potential loss situation by requiring a greater next day availability from the one-day total of deposits simply because the staff commentary gave an EXAMPLE of a local check deposited with cash back instead of saying local AND/OR non-local check.

Your examiner appears to be asking you to go beyond the intent of the regulation, and if it were me, I would ask for further clarification on this issue.

Forgot to add in my analysis - you must make at least $100 available for withdrawal NOT LATER THAN the next business day

What you did was make the $100 available NOT LATER THAN the next business day - i.e. your customer withdrew the $100 on the SAME day which meets the test of being available not later than the next business day.

I agree with Bonnie. You made the first $100 "available" when you gave cash back on the deposit. But...just for fun and to try to get inside the examiner's head, is it possible that they are looking at the cash back as separate from the deposit of the check?? If so, then I suppose the argument could be made that the first $100 from the "deposited check" also must be made available in addition to the $100 that was already given since the $100 cash back was not a part of the amount deposited. I do not agree that this is the way to handle this situation because the customer would, in fact, get $200 of early availability. But, I can see how Reg. CC could be interpreted that way if someone wanted to pick nits. (Like Andy said, going to the dentist sure is a lot more fun than trying to comply with Reg. CC.)

The only way I could see that you could give $100 today, and STILL give $100 available the next day would be to DEBIT THE ACCOUNT for the $100 withdrawal.

It's still a wash - Say I have $500 available in my account. I withdraw $100 cash so now I have $400. I deposit a $200 check, so the next day I wil have $500 available to me ($400 of today's balance and $100 of the check.)

Likewise - I have $500 available and deposit a $200 check - but take "cash-back" of $100. The next day I will STILL have only $500 available - that would be the balance from today and NO ADDITIONAL money from the deposit.

Now - for argument's sake - I have $500 available and I deposit $200. I don't take ANY cash back - and so the next day I have $600 available to me. So the next day I come in and withdraw $100...guess what? My balance is now $500!

In all 3 scenarios - I have $100 cash in my pocket, and $500 available to me in my account.

The same result happens no matter how you approach it. Reg CC itself is not the problem - the problem is people trying to invent ways to go around it.

Here's what I would do. You already have sufficient replies to your posting. Print this string, give a copy to the EIC and ask him/her to recheck. I would not go to the Ombudsman on this one. On the risk rating scale, this is not big enough for me. I'll take the hit and save my weapons for another battle.

Your examiner has too much time on his or her hands. On top of that, his or her reading of the regulation loses sight of two very important concerns: consumer rights as co nferred by the EFAA, and bank safety.

The right conferred on the consumer was access to the first $100 of a deposit made by check -- AND ONLY THAT FIRST $100. In other words, the bank is asked to take risk only to the extent of the first $100.

As Bonnie points out, the bank has choices in how it makes that first $100 available: immediately or next day. The fact that the bank has this choice does not double the consumer's rights. Making the funds available immediately is a nice thing to do, and it is more compliant than the minimum which is to make it available the next day.

Nothing alters the calculation from the amount of the checks. Cash deposited never figures in the hold calculations. Also, your examiner may need to be reminded that in calculating holds, the bank may aggregate all checks deposited by the same customer in that banking day. That means that the afternoon deposit gets no cash back because that first $100 was made available in the morning.

Thank you all for your analysis in support of our position on this.

I am in agreement with all the posts but rememember-Reg CC is a CONSUMER protection regulation, not really intended to protect the bank. Clearing usually takes longer than the time we are given (according to latest Fed Statistics).

The examiner may be one of those who is championing the cause of the poor mistreated customer( who would never do anything illegal)

Just a thought

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Jeff

Actually, I look at Reg CC as an exercise in risk management. IMHO, Reg CC strikes a balancing act to offer protection for both the customer and the bank.

If it was only biased toward customers, then banks wouldn't be able to place ANY holds! I think the problem is when you have an examiner who is "new" to the Reg, and/or perhaps just examined a bank that committed some very serious offenses.