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Fed is reviewing checkhold rules
WASHINGTON (8/11/10)--In reviewing the new financial reform law, comprised of more than 2,000 pages of text, Mike McLain has noted that among the big changes are nestled some seemingly small ones of which credit unions should be aware. McLain, who is senior compliance counsel and assistant general counsel for the Credit Union National Association (CUNA), noted recently that one such change is a provision amending the Expedited Funds Availability Act to raise the next-day-availability dollar requirement. “The law will require credit unions to make up to $200, rather than the current limit of $100, available the day after certain checks are deposited,” explained the CUNA rep. “What looks like a minor change will require new disclosures, data processing changes and staff training for many credit unions.” As currently required by the Fed’s Reg. CC for changes that expedite the availability of funds, credit unions and other depository institutions would have to notify members or customers of the increase within 30 days of the effective date of the increase to $200. “Contrary to what credit unions may have read on the Internet, this change was not effective the day President Obama signed the Dodd-Frank bill into law,” emphasized McLain. “The provision goes into effect when the new Consumer Financial Protection Bureau is established, which we expect could happen sometime in 2011.” At the end of 2009, the Federal Reserve Board staff assured CUNA that it planned to revisit the out-of-date Regulation CC, which implements the Expedited Funds Availability Act. The Fed said at the very least it would reconsider current check-hold exemptions in light of the need for depository institutions to better protect themselves from fraud due to the elimination of “nonlocal checks” that occurred in February 2010 when the Fed centralized all its check-processing operations in Cleveland. The regulation and the model forms have not yet been updated to correct the numerous references to “nonlocal checks.” “We understand that the Fed is busy reviewing Reg CC and will have a proposal out this fall, maybe as early as sometime in September, which will incorporate the new $200 figure,” McLain said. “CUNA will emphasize in its comment on the proposal the need for credit unions to have adequate time to comply with the higher next-day-availability requirement.”


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