View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Federal

reserve

Ba n k

OF DALLAS

Dallas, Texas, April 20, 1948

PROPOSED PRO CED U RE FO R CON DITION AL P A Y M E N T OF CHECKS
A N D D E L A Y E D RE TU R N OF U N P A ID ITEM S

To the Member and Nonm em ber Clearing Banks
in the Eleventh Federal R eserve D istrict:

There is reproduced below, fo r you r inform ation, the text o f the statem ent issued by the Board
o f Governors o f the Federal Reserve System w ith respect to proposed amendments to its Regula­
tion J, relating to the clearing and collection o f checks by the Federal Reserve ban k s:
W ithin the last few years, m any banks have adopted the practice o f “ delayed posting” o f
checks or o f m aking conditional paym ent fo r checks subject to the righ t to return dishonored
items on the business day n ext follow ing the receipt o f such checks. These practices have been
recognized b y the enactm ent o f statutes in a number o f States and b y rules adopted b y numer­
ous clearing house associations.
Recently, the A m erican Bankers A ssociation recommended to the Federal Reserve System
that amendments be made to Regulation J o f the Board o f Governors o f the Federal Reserve
System and to the circulars or operating letters o f the Federal Reserve banks governing check
collections in order to authorize a procedure fo r the conditional paym ent o f cash items pre­
sented b y Federal Reserve banks su bject to the righ t to return and reclaim paym ent fo r unpaid
items on the next succeeding business day a fter their receipt by drawee banks.
A ccordingly, after discussion o f this m atter w ith the Presidents o f the Federal Reserve
banks, the Board is publishing in the Federal R egister on or about A pril 15, 1948, notice o f a
proposal to adopt certain amendm ents to its Regulation J, relating to the clearing and collection
o f checks b y the Federal Reserve banks. In effect, the proposed amendments would perm it a
drawee bank to which a Federal Reserve bank sends a check fo r collection, if rem ittance is made
on the day o f receipt, to return the check fo r credit or refund at any tim e up to m idnight o f the
draw ee’s next business day follow in g receipt o f the check. A copy o f the notice to be published
in the Federal R egister, including the proposed amendments, is attached. A s stated in that no­
tice, interested persons m ay subm it w ritten comments w ith respect to the proposed amend­
ments n ot later than M ay 17, 1948.
It is to be noted that the amendments w hich are now proposed will becom e effective only
upon their form al adoption b y th e Board o f Governors at a later date and after due notice to
persons concerned through subsequent publication in the Federal Register.
In connection with this m atter, it is understood that the Am erican Bankers A ssociation at
the appropriate time will com m unicate with all banks relative to their contracts w ith their de­
positors, as represented by legends on deposit slips or otherwise, in order that such contracts
m ay afford banks adequate protection with respect to such conditional paym ent procedure. It is
also understood that the A ssociation will encourage State legislation authorizing a procedure
fo r the conditional paym ent o f checks and the return o f unpaid items on the next succeeding
business day and will dra ft a m odel statute providing fo r such procedure.
A copy o f the notice, referred to in the foreg oin g statement, is printed on the reverse side o f
this circular.
Yours very truly,
R. R. G ILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

REGULATION J.— CHECK CLEARING AND COLLECTION

Notice of Proposed Amendments

Pursuant to section 4 o f the Adm inistrative Procedure A ct and section 2 o f the Rules o f P ro­
cedure o f the Board o f Governors o f the Federal Reserve System (12 CFR 1946 Supp. 262.2), notice
is hereby given o f the proposed adoption b y the Board o f Governors o f the Federal Reserve System
o f certain amendments to R egulation J, relating to the clearing and collection o f checks b y Federal
Reserve banks. A u th ority fo r the adoption o f such amendments is contained in sections 11 (i), 13,
and 16 o f the Federal Reserve A c t (U.S.C., title 12, secs. 248 (i), 248 (o ), 342, and 360.)
Interested persons m ay subm it data, views or argum ents with respect to the proposed amend­
ments ; and such m aterial should be subm itted in writing. A lthough submittals or requests m ay be
sent directly to the Board, it is preferable that they be sent to the Federal Reserve bank o f the dis­
trict, which will forw ard them to the Board. To be considered, all material m ust be received not later
than M ay 17, 1948.
The proposed amendments to Regulation J would be substantially as fo llo w s :
1. Paragraph (2 ) o f section 5 would be amended b y adding at the end o f such paragraph the
follow ing sentence:
A Federal R eserve bank, or any agent to which such checks are forw arded b y a Federal Reserve
bank, m ay present such checks pursuant to any special collection agreem ent not inconsistent
with the term s o f this regulation or m ay present them through a clearing house or clearing
house association subject to the rules and practices thereof.
2. Section 5 would be amended by inserting therein a new paragraph (4 ) reading as set forth
below and b y changing the designations o f present paragraphs (4) to (8 ), inclusive, so that such
paragraphs will be designated (5 ) to (9 ), inclusive:
(4 ) A n y check which a Federal Reserve bank or an agent th ereof presents to the drawee
bank fo r paym ent or sends to the drawee bank fo r collection, and fo r which rem ittance or
settlem ent is made b y the drawee bank on the day on which it receives3 such check, m ay be
returned fo r credit or refund at any time prior to m idnight o f the draw ee’s next business day
follow ing such day o f receipt or prior to the tim e provided b y applicable clearing house rule or
special collection agreement, w hichever is earlier, except that this paragraph shall not apply to
checks presented over the counter.

3 A check received by a drawee bank on a day other than a business day or received on a business day after its
regular business hours shall be deemed to have been received on the next succeeding business day.

3. Section 6 would be amended to read as follow s:
E ach Federal Reserve bank m ay also prom ulgate rules n ot inconsistent with the term s o f
the law or o f this Regulation, governing the details o f its operations in clearing and collecting
checks and other cash items. Such rules shall be set forth by the Federal Reserve bank in its
letters o f instruction to its m em ber and nonmember clearing banks and shall be binding upon
any m em ber or nonmember clearing bank which sends any check or other cash item to such
Federal Reserve bank fo r collection or to any other Federal Reserve bank fo r the account o f
such Federal Reserve bank fo r collection.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102