Forgive the anonymous post. I need some input concerning a recent "incident" at our bank (I've been forbidden to call it a disaster, fiasco, etc ). Our operating system crashed and our two back up systems failed due to the same problem. (I'm not here to talk about disaster recovery plans--I was only asked to assess the compliance impact of the "incident.") I specifically have some funds availability questions for all of you.

Our systems failed at 10:00am on a Monday morning and were restored at 1:00pm on Tuesday. During the outage, we accepted deposits and issued handwritten receipts. All customers were limited to making withdrawals/cashing checks of no more than $100. After systems were restored, we began posting the previous day's work. We caught up by 11:00 pm Tuesday evening. We have next day availability on all deposits, and despite EXTENSIVE Reg CC training, not one employee handed out an emergency conditions exception hold. I know that Reg CC does not require you to deliver the exception hold notice when using the emergency condition reason if funds become available before the notice needs to be sent--but like I said, it took us until 11:00 pm on Tuesday to finish Monday's work. So we had quite a few exceptions.

I'm trying to provide training on how to solve this problem in the future, and I want to know what others have planned to do or have done in similar situations.

First of all--is this bank's policy of only allowing $100 maximum withdrawals during a systems outage even allowed? That's like putting a hold on every account even if the funds have been collected and in the account for a long time.

Second-we were accepting cash deposits during the outage and as far as I can tell in Reg CC--exception holds don't apply to cash deposits--they definitely have to be available for withdrawal by the next day. Ditto with Electronic deposits.

How do you handle an "incident" like this, still serve your customers and avoid getting stiffed?

Notice how lots of people are reading your post and NO ONE is responding??!! My advice would be to contact a compliance vendor like Kirchman Regulatory Services (they'll advise anyone for free even if you don't subscribe to their services) and get a straight answer from them. Obviously the rest of us are as unsure as you as to how to handle something like this!

Here is language from the Official Staff Commentary to section 229.13(f) of Regulation CC. Part of your answer may be in the last sentence of this section.

1. Certain emergency conditions may arise that delay the collection or return of checks, or delay the processing and updating of customer accounts. In the circumstances specified in this paragraph, the depositary bank may extend the holds that are placed on deposits of checks that are affected by such delays, if the bank exercises such diligence as the circumstances require. For example, if a bank learns that a check has been delayed in the process of collection due to severe weather conditions or other causes beyond its control, an emergency condition covered by this section may exist and the bank may place a hold on the check to reflect the delay. This exception applies to local and nonlocal checks, as well as checks that would otherwise be made available on the next (or second) business day after the day of deposit under Sec. 229.10(c). When a bank places or extends a hold under this exception, it need not make the first $100 of a deposit available for withdrawal on the next business day, as otherwise would be required by Sec. 229.10(c)(1)(vii). In cases where the emergency conditions exception does not apply, as in the case of deposits of cash or electronic payments under Sec. 229.10 (a) and (b), the depositary bank may not be liable for a delay in making funds available for withdrawal if the delay is due to a bona fide error such as an unavoidable computer malfunction.

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Notice how lots of people are reading your post and NO ONE is responding??!!

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Yes, I did notice that. I figured I either asked a really dumb question or a really tough one. Responses are usually so speedy on BOL, I was starting to feel neglected . Thanks for your suggestion.

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In cases where the emergency conditions exception does not apply, as in the case of deposits of cash or electronic payments under Sec. 229.10 (a) and (b), the depositary bank may not be liable for a delay in making funds available for withdrawal if the delay is due to a bona fide error such as an unavoidable computer malfunction.

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Hey other Anonymous user--thanks for the cite. I missed that during my frantic search of CC. At least it answers part of my question.

On behalf of the rest of us that were just as dumbfounded, thanks.