It's interesting how things are moving in tandem. Check 21 requires the Fed to submit a study to Congress 30 months after its effective date which, among other things, includes:
(5) the appropriateness of the time periods and amount limits applicable under sections 603 and 604 of the Expedited Funds Availability Act, as in effect on the date of enactment of this Act.
The foregone conclusion is that the holds available under Regulation CC should be reduced if not eliminated due to Check 21's expected acceleration of the clearing system.
However, as the size of check processing regions grow due to consolidation, the already dubious value of 2 day holds on local checks declines. Simultaneously, the availability of 5 day holds on what once were nonlocal checks becomes increasingly rare. As more checks become local checks, the 11 day exception hold will become an endangered species, with the maximum exception hold being 7 days for most items. That's all happening without an opportunity for industry comment. It's also taking place before banks have the opportunity to make use of abbreviated clearing times via Check 21.
Regulation CC holds are being watered down. Consumers are going to get accelerated funds availability, but Check 21 may end up having little to do with it.
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