Removing Barriers Blog

CUNA Joins Other Trades in Support of Proposed Changes to Fed’s Reg J
Posted May 14, 2018 by CUNA Advocacy

This week, CUNA joined The Clearing House, ABA, and NAFCU in a letter to the Federal Reserve Board generally supporting proposed changes to Reg J, Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers Through Fedwire. The proposed changes to Reg J are intended to remove obsolete provisions and align certain aspects with Reg CC, which was amended last year to reflect the shift to a virtually all electronic check collection system. The proposal would accomplish this by, for example, incorporating defined terms and other provisions from Reg CC into Reg J by reference.

We agree with the proposed changes to align the defined terms, warranties and indemnities in Reg J for electronic items with the new defined terms, warranties, and indemnities for electronic checks and electronic returned checks in amended Reg CC. We believe this approach will help improve consistency between, and reduce unnecessary duplication within, the two regulations.

However, with respect to the warranties and indemnities that would be made by the Reserve Banks under the proposal, we believe Reg J should clearly state the Reserve Banks make the Reg CC electronic check warranties to the same recipients (including drawer and owner of the check) as is set forth in Reg CC.