Reg CC Restrictions for Early Closing

Posted By: M&M

Reg CC Restrictions for Early Closing - 12/28/04 07:28 PM

With the holiday last week, there were banks in the area that closed before 2:00. Any thoughts on how that would not violate Reg CC, 229.19(a)(5)(ii), which states that funds may be considered deposited on the next banking day after a cutoff hour of 2:00 p.m. or later? I read that to mean that deposits are considered same day until 2:00 p.m., meaning we cannot stop courier service or close until 2:00.
Posted By: waldensouth

Re: Reg CC Restrictions for Early Closing - 12/28/04 07:39 PM

The commentary states: "A bank is not required to remain open until 2:00 p.m. If a bank closes before 2:00 p.m., deposits received after the closing may be considered on the next banking day."
Posted By: John Burnett

Re: Reg CC Restrictions for Early Closing - 12/28/04 08:06 PM

Quote:

The commentary states: "A bank is not required to remain open until 2:00 p.m. If a bank closes before 2:00 p.m., deposits received after the closing may be considered on the next banking day."




As Paul Harvey would say, here's the rest of the story: The 2:00 requirement simply means that a bank cannot cut everyone over to the next business day until 2:00 and remain open. So if the bank closes at 2 or earlier, everything received that day should be counted as received on that day, not the next. But if a bank stays open after 2, it can be operating completely on the next business day.
Posted By: M&M

Re: Reg CC Restrictions for Early Closing - 12/28/04 08:44 PM

Thanks, John, for the clarification! Our issue was exactly that- we wanted to pick up work early but remain open until 2:00, which cannot be done.
Posted By: Anonymous

Re: Reg CC Restrictions for Early Closing - 12/28/04 09:47 PM

One clarification- I was mistaken in my original message. Other banks in our area cutoff early on Christmas Eve, but they remained open until 2:00. I would think that would be a violation of 229.19 if they didn't post anything received before 2:00 on the same day.
Posted By: John Burnett

Re: Reg CC Restrictions for Early Closing - 12/28/04 09:54 PM

Many are of the opinion -- which I once shared but have since abandoned since I can now look at things a bit more objectively -- that keeping one teller on "today's work" and allowing customers to decide who does the transaction fits the spirit of the rule.

That would be true except that there's more at stake here than whether the customer needs the deposit to post today. The regulation is actually more concerned with determining when to start counting business days for purposes of availability, and that is always started on the banking day on which the deposit is received. True compliance with the regulation requires that ALL transactions received by 2 p.m. be considered "today's work."
Posted By: Elwood P. Dowd

Re: Reg CC Restrictions for Early Closing - 12/28/04 10:04 PM

It's not a practice I would recommend, but it is one that I have been guilty of following. There is no impact on the customer in terms of availability unless you place a hold. If you place a hold on an item deposited the day you "cut off" early, you make darn certain you considered the following banking day as the banking day of deposit in determining the length of the hold. If you do, there is no tangible effect on the customer...

If they bring up the delay in interest accrual on items deposited to a NOW account the discussion might be longer.
Posted By: rlcarey

Re: Reg CC Restrictions for Early Closing - 12/28/04 10:44 PM

Quote:

There is no impact on the customer in terms of availability unless you place a hold. If you place a hold on an item deposited the day you "cut off" early, you make darn certain you considered the following banking day as the banking day of deposit in determining the length of the hold. If you do, there is no tangible effect on the customer...





Ken,

I would beg to differ with you. In the cases where you didn't place a hold (99.99%) and the customer expected those funds to be available the next business day is where the real fireworks would begin. Think of all the customers that might become overdrawn due to the one day delay

I think this is a technical Reg CC violation and they better be very careful processing the next business day's overdrafts otherwise they could have a rash of wrongful dishonor lawsuits.
Posted By: Elwood P. Dowd

Re: Reg CC Restrictions for Early Closing - 12/28/04 10:58 PM

Randy,
I agree with you. To be in any way defensible, this has to be done so there is no effect on the customer. If they draw against the funds the following business day a next day availability bank would have to make certain the item was paid. As noted here before, the effects of an illegal hold or a failure to make funds available that results in wrongful dishonor are a lot more dramatic than any Regulation CC violation.

I'm just confessing my sins, not trying to lead a rebellion.
Posted By: John Burnett

Re: Reg CC Restrictions for Early Closing - 12/29/04 02:08 PM

Quote:

I'm just confessing my sins, not trying to lead a rebellion.




And here I was, about to call out the National Guard to put down your uprising, Ken!