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#83819 - 05/30/03 05:34 PM Reg CC-Case by Case Holds
Anonymous
Unregistered

I know that we are not required to state a reason on the hold notice when placing a case-by-case hold, but is it a violation if we do? For instance, if a teller places a case-by-case hold on a local check, but marks the "excessive overdrafts" reason in the exception hold section on our form, is that a Reg CC violation?

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#83820 - 05/30/03 05:44 PM Re: Reg CC-Case by Case Holds
Anonymous
Unregistered

I don't know that I would worry about it. Assuming "excessive overdrafts" is a valid reason for the hold, it sounds like you just used an exception hold rather than a case-by-case hold. There is nothing wrong with that. You never have to use the maximum hold periods, so assuming you used the maximum case-by-case holds of 2 or 5 days (local vs non-local) there should be no problem.

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#83821 - 05/30/03 06:18 PM Re: Reg CC-Case by Case Holds
complyguy Offline
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PA
From a privacy point of view, I'd want to make sure that the person making the deposit is an owner of the account, not just a gopher, before I would note a derogatory reason on the hold notice (assuming you complete the hold notice at the time of deposit).

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#83822 - 05/30/03 06:48 PM Re: Reg CC-Case by Case Holds
Kansayaku Offline
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I do not think there is a problem with listing a reason although it is not required. That said, consider the reasons that may be listed. You will not want to list something like "credit card check" on the notice because it could lead to suspicion that you are descriminating against a particular class of check. If you stay away from things such as that, you should be fine.

Is there a reason that you would want to list the reason on the notice?
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#83823 - 06/02/03 01:38 PM Re: Reg CC-Case by Case Holds
PABanker Offline
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Blue Ball, PA 17506
Be careful marking reasons as you may get into exception hold reasons and could become a violation. The auditor wrote us up for marking reasons as case by case holds really do not need a reason to place that type of hold.

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#83824 - 06/02/03 03:21 PM Re: Reg CC-Case by Case Holds
mmason Offline
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New England
We have also been written up for this by an outsourced auditor, not as a 'violation' but as something that should be corrected. We use a combination notice and the tellers were filling in the case-by-case section and checking off a reason in the exception section. We were told that we need to indicate one or the other, we can't use both. So, it may depend on what your notice looks like. It should be okay if they aren't indicating both hold types as we were.

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#83825 - 06/02/03 03:54 PM Re: Reg CC-Case by Case Holds
rlcarey Online
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I would like to know where in the regulation that is says you can't give the customer a reason for invoking a case-by case hold. While I agree that it is not needed, I would fight such a citation tooth and nail.
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#83826 - 06/02/03 05:25 PM Re: Reg CC-Case by Case Holds
waldensouth Offline
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FINALLY ABOVE the gnat line
It has been my experience that regulators and auditors will note such "over-disclosure" in the report as a training issue. It gives the appearance that the staff doesn't know the difference and doesn't really understand what they are doing. It also doesn't protect the bank if it's supposed to be an exception hold and the time limit is not sufficient to allow the check to clear.
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#83827 - 06/02/03 05:33 PM Re: Reg CC-Case by Case Holds
rlcarey Online
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Louvera,

I don't disagree, but it better be no more than a footnote in the report unless they have other substantial issues that back up the claim that there is a lack of understanding.
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#83828 - 06/02/03 08:38 PM Re: Reg CC-Case by Case Holds
Johncrcm Offline
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Eastern KY
Quote:

It has been my experience that regulators and auditors will note such "over-disclosure" in the report as a training issue. It gives the appearance that the staff doesn't know the difference and doesn't really understand what they are doing. It also doesn't protect the bank if it's supposed to be an exception hold and the time limit is not sufficient to allow the check to clear.




"Dito" on the experience. Even though it was not "proven" to be a repetitive situation, in the exit meeting it was a point used to not give us a number one rating.

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#83829 - 06/02/03 09:04 PM Re: Reg CC-Case by Case Holds
rlcarey Online
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rlcarey
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Galveston, TX
****** RANT WARNING ******


Quote:

"Dito" on the experience. Even though it was not "proven" to be a repetitive situation, in the exit meeting it was a point used to not give us a number one rating.




Unless the examiners could point to "BOTH" the loss ratio suffered by the bank as a result of not invoking exception holds and the lack of understanding by frontline personnel, I would protest the use of this point for anything - especially the impact of a compliance rating. If you have a low historical loss record, then apparently your use of holds is effective. I hate it when regulators lose sight of the intent of the law. The intent is to make funds available to the consumer "SOONER" not later than what was happening before the regulation. This is not a "bank protection" regulation. If a bank can hold funds for shorter periods and control their losses then they have no citation! There is nothing in the regulation that says "if you invoke an exception you have to hold for the maximum time" if your loss ratio does not indicate that you are assuming undue risks.

Now, as management, I would want to address this issue and get it fixed, but I would not stand for the regulatory shenanigans.
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#83830 - 06/03/03 12:01 AM Re: Reg CC-Case by Case Holds
David Dickinson Offline
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Central City, NE
I'm with Randy on this. If someone tries to criticize your "overages" you should stand up and fight. A comment (or footnote) is one thing, but a criticism or violation is a battle that I would take.
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#83831 - 06/03/03 01:09 AM Re: Reg CC-Case by Case Holds
Princess Romeo Offline

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Quote:

I'm with Randy on this. If someone tries to criticize your "overages" you should stand up and fight. A comment (or footnote) is one thing, but a criticism or violation is a battle that I would take.



David - the only cautionary note I would add is this:
IF you have OTHER issues in your exam that your regulator can roast you, but instead they have only given you a mild singeing, then it may be better to simply accept the other criticism.

I know that doesn't make it right, and perhaps you are setting the next bank up to take a similar hit, but when managing an exam, you do have to look at the overall effect one action might cause.

This comes from the "Been there, done that, got the T-shirt" summer camp of Compliance Fun.
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