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Federal R eserve Bank OF DALLAS W IL L IA M H. W ALLACE DALLAS, TEXAS 7 5 2 2 2 FIRST v i c e p r e s i d e n t AND C H IE F O PER ATING O FFIC E R October 6, 1988 C ir c u la r 88-66 TO: The Chief Executive O fficer of a ll member banks and others concerned in the Eleventh Federal Reserve D i s t r i c t SUBJECT A v a i l a b i l i t y o f Cash Deposits DETAILS The Board of Governors' Regulation CC (Funds A v a i l a b i l i t y ) provides fo r Board determinations of whether s t a t e law r e l a t e d to the a v a i l a b i l i t y of funds is preempted by federal law. These determinations would be provided upon the request of a s t a t e , a bank or o ther i n t e r e s t e d p arty. On June 28, 1988, the Board requested comments on the r e l a t i o n s h i p between Regulation CC and se ctio n 4-213(5) of the Uniform Commercial Code (UCC). This se ction of the UCC provides f o r next-day a v a i l a b i l i t y of "money" deposited in a bank. Regulation CC req u ires t h a t deposits of cash be made a v a il a b le on e i t h e r a next-day or two-day b a s i s , depending on whether the cash was deposited a t a s t a f f e d t e l l e r s t a t i o n . The UCC provisions have been adopted in each of the 50 s t a t e s . The next-day a v a i l a b i l i t y requirement in the UCC is su b je ct to a general v a r i a t i o n by agreement provision. The Board proposed t h a t , because the a b i l i t y to vary t h i s provision by agreement may allow depositary banks to provide a v a i l a b i l i t y to t h e i r customers in a longer time than permitted by Regulation CC, t h i s UCC provision would be preempted by the Expedited Funds A v a i l a b i l i t y Act and Regulation CC. The Board also requested comment on an a l t e r n a t i v e approach, whereby t h i s UCC provision would supersede the Regulation CC requirement, but a d ep o s ita ry bank could not agree to extend a v a i l a b i l i t y beyond the time periods provided in Regulation CC. The Board has adopted t h i s approach, and determined t h a t UCC ยง4-213(5) governing a v a i l a b i l i t y of cash deposits supersedes the federal requirement, but the a b i l i t y of a bank to vary t h i s provision by agreement under the UCC is lim ited by the time periods provided in the federal a v a i l a b i l i t y schedule. For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - MORE INFORMATION For f u r t h e r inform ation, please c o n tact Dean A. Pankonien or Sharon A. Sweeney a t (214) 651-6228. For ad d itio n a l copies of t h i s c i r c u l a r , please co n ta c t the Public A f fa ir s Department a t (214) 651-6289. S incerely yours,
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