Great question from our New Accounts training class - why are Travler's Checks next-day items only for New Accounts?

I certainly offered a few thoughts of my own, but I don't find any real explaination and would appreciate any help.

Great lobbying from the traveler's check industry?

Well, that is one explaination I did not think of...

Maybe because new Congress men/women arriving in Washington DC and needing to open new bank accounts, had travelers checks with which to open the new accounts, so when CC was written, extra consideration was given to availability of funds from Travelers Checks.

That is very similar to the possible explaination that I provided - in consideration to people moving who may need immediate access to funds for living expenses. I also indicated that this reg is from nearly 20 years ago, when technology and fraud were not nearly what it is today, so counterfeits were not as much of an issue.

Does the government, when writing regs, ever make sense?

LoisLane is young enough that she could have pleaded ignorance of the reasoning behind this strange treatment of traveler's checks. But she has the correct answer -- except that it had more to do with congressional staffers than the representatives themselves. It's sort of ironic that traveler's checks deposited to other than a new account aren't afforded any special treatment by the law at all.

As to Mountain Gal's question, the answer is Yes. Some legislation makes sense. But the Expedited Funds Availability Act isn't a shining example.

It may be a silly question, but why would anyone want to place a hold on travelers checks? Isn't that irrationality the reason why the law was enactacted in the first place? I've never had a TC loss after it was shown we acted in good faith. TC companies depend on acceptability of their instruments and unless there's a forged endorsement or other obvious problem, they'll eat the check losses.

It's when we don't think that Congress tends to get involved. I even heard of instances where holds were being placed on Treasury checks way-back-when. EFA is a great example of the need for consumer protection over the misdeeds of our less informed bretheren.

I have always held a variation on Mountain Gal's opinion. Since travelers checks were not given next day availability for existing accounts, I believed it was a drafting error they never bothered to fix. There are some reasons for exception holds in the model forms that are simply ridiculous, but they have survived since 1988.

could someone give me a cite on this? Thanks

12 CFR 229.13(a)