I am unclear if


Total deposit - $304,500 - made in person with a teller into the account of the payee
Personal check - $4,500
Official bank check (cashier's check) - $300,000

Want to place a large deposit hold and maximize the hold with a case-by-case hold if I am able. Which is correct?

A - $5,000 next day availability
$299,500 seventh day availability

or

B - $5,200 next day availability
$4,300 second day availability
$295,000 seventh day availability

Thanks in advance!

A.

(b) Large deposits. Sections 229.10(c) and 229.12 do not apply to the aggregate amount of deposits by one or more checks to the extent that the aggregate amount is in excess of $5,000 [effective 7/1/2020, $5,525] on any one banking. day.

Thanks for the response. My instinct is that A is also correct. But unfortunately I'm still a bit unclear when it comes to what availability has to given to the first $5,000. I read the quoted citation above as applying to the amount in excess of $5000.

The quoted citation below from the Official Interpretation is what I am not clear on; particularly "Although the first $5,000 [effective 7/1/2020, $5,525] of a day's deposit is subject to the availability otherwise provided for checks..." and the comment about the bank having discretion to chose the portion of the deposit to which it applies the exception.

"Although the first $5,000 [effective 7/1/2020, $5,525] of a day's deposit is subject to the availability otherwise provided for checks, the amount in excess of $5,000 [effective 7/1/2020, $5,525] may be held for an additional period of time as provided in §229.13(h). When the large deposit exception is applied to deposits composed of a mix of checks that would otherwise be subject to differing availability schedules, the depositary bank has the discretion to choose the portion of the deposit to which it applies the exception."

Is the availability for the first $5000 based on the availability schedule for each check in the day's deposit? If it is mixed check types do we provide availability based on the item that requires the soonest availability such as a cashier's check because we could not place a case-by-case hold on that check?

Had these checks both been local checks then would the following be correct since we can put a case-by-case hold on the first $5,000?

$200 next day availability
$4800 second day availability
$299,500 seventh day availability

or would it be the same as A above because our general policy for all checks is next day availability?
$5000 next day
$299,500 seventh day availability

Thanks in advance!

The first $5,000 of the deposit comprises either:
1) The entire $4,500 personal check and $500 of the cashier's check, or
2) $5000 of the cashier's check.

You get to choose.

If you choose option 1, you'll make the first $700 available next day, $4,300 available by BD 2 and the balance of the cashier's check available by BD 7. This will require using a CBC hold of $4,300 on the personal check in addition to the large deposit hold.

If you choose option 2, you'll make $5,000 available next day, and the rest of the deposit available by BD 7. You can't put a CBC hold on any part of the first $5,000 because it's a cashier's check.

Thanks very much - your examples make the statement in the official interpretation make sense to me now!

Great explanation, John. Well said. Likes to Comply, you asked:


If they were both local checks, you would still aggregate them, but none of the funds would have next day availability, meaning you first example ($200, $4800, $299500) would be correct. Keep in mind that the "general policy" can still be extended through a case-by-case hold (assuming you properly disclose it).

In John's example of your situation, the $700 next day is confusing because the local check is less than $5,000, meaning you must "tap into" part of the next day item with your first $5,000. If the local check was over $5,000, you wouldn't have had to do that to maximize your availability. For example, if your local check was $6,000 and the cashier's check was $300,000, you could apply the exception hold to the cashier's check and $1,000 of the local check, meaning that the first $5,000 of the local check would have standard availability - which you can use a case-by-case hold for with the $200/$4,800 approach.

Again, all of this is a discussion on "maximizing the hold" as you can always keep it simple by doing/holding less if you are comfortable with the risk.

Back in one of its 2010 or 2014 proposals to clean up Reg CC (it doesn't matter which), the Fed asked whether it should consider eliminating the case-by-case hold since it only delayed availability one extra day. At the time, I thought some banks might have check loss history to justify putting CBC holds on. Others might not. I also suggested that if the CBC hold were eliminated, more banks might try to protect themselves by going to normal second business day availability on non-next-day items.

But one thing I know for certain. If the CBC hold were to disappear, it would make it a lot easier to figure out the answers to questions like the one posed at the top of this discussion.

This conversation has been extremely helpful. Thank you both!!!

John, that is a great point and I too remember seeing the question about eliminating case-by-case holds. It will be interesting to see how the final rule looks since the proposal has been out there for the better part of the decade.

On a similar note - To limit confusion for staff, I have seen where some (often smaller) financial institutions will choose to only utilize either case-by-case holds or or special exception holds. One or the other. While I completely understand only utilizing special exception holds, I never understood the logic of only using case-by-case holds instead of special exception holds. Sure, one might argue that it is easier to train staff (though that will be likely after the 7/1/20 threshold changes), but as far as limiting risk goes, special exception holds are much more valuable IMHO.