The large number of complaints from individuals, the actions by the legislatures of two major states, legislation now before the Subcommittee, and recent actions by the Federal Reserve Board of Governors and other federal agencies, attest to the seriousness of the practice by many depository institutions of delaying the availability of customer deposited funds beyond a reasonable amount of time. Hearings by the Financial Institutions Subcommittee wil be held on April 4 on the delayed funds availability problem and legislation to address it. Copies of this legislation will be sent to you shortly. You, or your designee, are requested to appear before the Subcommittee on April 4 at 9:30 a.m. in room 2128 of the Rayburn House Office Building to provide testimony on the delayed funds availability problem and the proposed legislation. In addition, please evaluate the present state and federal statutory framework governing check clearing and funds availability. Please also provide for the various kinds of depository institutions which offer transaction accounts, (1) specific estimates of the time intervals between the date a customer deposits funds into a transaction account and the date when an institution receives provisional credit for the deposit, (2) the percentage of deposits into transaction accounts which are returned for reasons of "non-sufficient funds" (NSF), (3) the cost of processing an NSF item, and (4) the percentage of deposits which actually result in institution losses. In accordance with Committee rules, please deliver 100 copies of your prepared statement to room 8303 Rayburn, 24 hours in advance of your appearance before the Subcommittee. It is also requested that you limit you oral testimony to 10 minutes to enable all Subcommittee Members sufficient time for questioning. Your prepared statement will be distributed to all Members of the Subcommittee in advance of the hearing and will be included in its entirety in the hearing record. I look forward to your testimony. Sincerely, Fehand Jst Germain The large number of complaints from individuals, the actions by the legislatures of two major states, legislation now before the Subcommittee, and recent actions by the Federal Reserve Board of Governors and other federal agencies, attest to the seriousness of the practice by many depository institutions of delaying the availability of customer deposited funds beyond a reasonable amount of time. Hearings by the Financial Institutions Subcommittee wil be held on April 4 on the delayed funds availability problem and legislation to address it. Copies of this legislation will be sent to you shortly. You are requested to appear before the Subcommittee on April 4 at 9:30 a.m. in room 2128 of the Rayburn House Office Building to provide testimony on the delayed funds availability problem from the perspective of the institutions you regulate and the proposed legislation. In addition, please evaluate the present state and federal statutory framework governing check clearing and funds availability. Please also provide for the institutions under your jurisdiction, (1) specific estimates of the time interval between the date a customer deposits funds into a transaction account and the date when an institution receives provisional credit for the deposit, (2) the percentage of deposits into transaction accounts which are returned for reasons of "non-sufficient funds" (NSF), (3) the cost of processing an NSF item, and (4) the percentage of deposits which actually result in institution losses. In accordance with Committee rules, please deliver 100 copies of your prepared statement to room B303 Rayburn, 24 hours in advance of your appearance before the Subcommittee. It is also requested that you limit your oral testimony to 10 minutes to enable all Subcommittee Members sufficient time for questioning. Your prepared statement will be distributed to all Members of the Subcommittee in advance of the hearing and will be included in its entirety in the hearing record. The large number of complaints from individuals, the actions by the legislatures of two major states, legislation now before the Subcommittee, and recent actions by the Federal Reserve Board of Governors and other federal agencies, attest to the seriousness of the practice by many depository institutions of delaying the availability of customer deposited funds beyond a reasonable amount of time. Hearings by the Financial Institutions Subcommittee wil be held on April 4 on the delayed funds availability problem and legislation to address it. Copies of this legislation will be sent to you shortly. You are requested to appear before the Subcommittee on April 4 at 9:30 a.m. in room 2128 of the Rayburn House Office Building to provide testimony on the delayed funds availability problem from the perspective of the institutions you regulate and the proposed legislation. In addition, please evaluate the present state and federal statutory framework governing check clearing and funds availability. In accordance with Committee rules, please deliver 100 copies of your prepared statement to room B303 Rayburn, 24 hours in advance of your appearance before the Subcommittee. It is also requested that you limit your oral testimony to 10 minutes to enable all Subcommittee Members sufficient time for questioning. Your prepared statement will be distributed to all Members of the Subcommittee in advance of the hearing and will be included in its entirety in the hearing record. VINCENT TESE SUPERINTENDENT OF BANKS STATE OF NEW YORK February 27, 1984 TO THE INDIVIDUAL OR COMMUNITY GROUP ADDRESSED: OF A At its meeting held on December 8, 1983, the New York State Banking Board adopted new General Regulation Part 34. This regulation, which becomes effective March 8, 1984, will enable any retail customer depositing a check in any commercial bank, savings bank, savings and loan association or foreign bank branch located in New York State to know exactly when those funds will be available for withdrawal and specifies, for deposits under $2500, when these institutions must make the funds available for withdrawal. This regulation implements the law enacted by the State Legislature last year. Thus, New York becomes the first state in the nation to adopt such consumer-oriented legislation and regulation. I am enclosing a copy of this regulation so that you may inform your members of its provisions. Also enclosed is a brief summary of the major provisions of this regulation. SUMMARY OF MAJOR PROVISIONS OF GENERAL REGULATION PART 34 This regulation applies only to deposits made into accounts opened by a natural person, which are used primarily for personal, family or household purposes. This regulation refers to funds being made available at the opening of business on the first business day following the passage of a certain number of business days from the day of deposit. 'Business day' means every day other than Saturdays, Sundays, and legal holidays. In making the computation of when funds from a deposited item must be made available, there are excluded in all cases: (i) the day on which the deposit is made, and (ii) all days which are not business days. In addition, if a deposit is made on a Saturday, Sunday, legal holiday, or after the close of business for the branch at which the deposit is made, the following business day is also excluded from the computation. (Close of business may be any time after 2 p.m., as provided in section 4-107 of the Uniform Commercial Code.) Therefore, by way of example: Funds from a two-day item deposited at noon on Monday, would be available for withdrawal at the start of business Thursday. Assuming a 3 p.m. close of business, funds from a two-day item deposited the previous Friday evening would be made available at the start of business Thursday. Subject to the exceptions discussed below, funds for items drawn in amounts of $2500 or less must be made available in accordance with the following schedules. Commercial banks must make funds available: - after two business days for items drawn on a local bank or savings institution (A 'local bank or savings institution' is an office of a banking institution that is located in the same city, town or village and uses the same clearing facility as the office of the bank at which the deposit is made. · after three business days for other items drawn on New York banking institutions. · after six business days for items drawn on an office of a banking institution located elsewhere in the United States. The time limits to which savings banks and savings and loan associations are subject for corresponding classes of items are three, four, and eight business days. |