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F ederal reserve Ba n k DALLAS, TEXAS of Dallas 75222 Circular No. 70-281 November 19f 1970 REPRINT OF REGULATION J To the Member and Nonmember Banks of the Eleventh Federal Reserve District, and Others Concerned: Enclosed is the new larger-size reprint of Regulation J, as amended effective October 1, 1969 . No amendments to the Regulation have been issued subsequent to October 1, 1969 . The small-size Regulation J with applicable amendment should be removed from your binder and may be destroyed. Yours very truly, P. E. Coldwell President Enclosure This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM COLLECTION OF CHECKS AND OTHER ITEMS BY FEDERAL RESERVE BANKS REGULATION J (12 CFR 210) As amended effective October 1,1969 Any Inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve district in which the inquiry arises. Copies of such Banks’ operating letters that are referred to in this regulation are available upon request to the issuing Bank. CONTENTS S e c . 2 1 0 .1 — A u t h o r it y S e c . 2 1 0 .2 — D e f in it io n s S e c . 2 1 0 .3 — G eneral S e c . 2 1 0 .4 — S e n d in g S c o p e ................. 3 ......................................... 3 P r o v i s i o n s ...................... 4 and of Item s R eserv e Ba to F ederal S e c . 2 1 0 .1 0 — T i m e S c h e d u l e a n d A v a il a b il it y o f C r e d it s w i t h R e s p e c t t o C a sh I t e m s . . . S e c . 2 1 0 .1 1 — A v a il a b il it y o f P r o c e e d s o f N o ncash I t e m s of . 8 C a s h I t e m s ........... 8 ........................... 4 S e c . 2 1 0 .1 2 — R e t u r n ................... 5 S e c . 2 1 0 .1 3 — C h a r g e b a c k o f U n p a id C a sh I t e m s and N o ncash I t e m s S e c . 2 1 0 .6 — S t a t u s a n d W a r r a n t ie s o f F edera l R eser v e Ba n k . . . . 6 S e c . 2 1 0 .1 4 — T i m e l i n e s s of S e c . 2 1 0 .7 — P r e s e n t m e n t 6 S e c . 2 1 0 .1 5 — E f f e c t D ir e c t P r e s e n t C e r t a in W a r S e c . 2 1 0 .5 — S e n d e r ’s A g n k s reem en t for Paym ent . . m ent rants of of of A c t io 6 S e c . 2 1 0 .1 6 — O p e r a t in g L e t t e r S e c . 2 1 0 .9 — R e m i t t a n c e 7 Statutory A p p e n P aym ent . . . d ix n ............. ........................................... .. S e c . 2 1 0 .8 — P r e s e n t m e n t o f N o n c a s h Ite m s for A ccepta n ce . . . . and 7 9 9 ................... 9 ................................................ 10 s REGULATION J (12 CFR 210) As amended effective October 1, 1969 COLLECTION OF CHECKS AND OTHER ITEMS BY FEDERAL RESERVE BANKS* SECTION 210.1—AUTHORITY A N D SCOPE SECTION 210.2—DEFINITIONS (a) Pursuant to the provisions of section 13 of the Federal Reserve Act, as amended (12 U.S.C. § 342), section 16 of the Federal Reserve Act (12 U.S.C. § 2 48(o); 12 U.S.C. § 360), sec tion 11 (i) of the Federal Reserve Act (12 U.S.C. § 248( i ) ), and other provisions of law, the Board of Governors of the Federal Reserve System has promulgated this Part governing the collection of checks and other cash items and the collection of noncash items by the Federal Reserve Banks. (b) The Federal Reserve Banks, as depositaries and fiscal agents of the United States, handle certain items as cash items or noncash items. To the extent contemplated by regulations issued by, and arrangements made with, the United States Treasury Department and other Government De partments, the handling of such items by the Fed eral Reserve Banks is governed by the provisions of this Part. The operating letters of the Federal Reserve Banks shall include such information regarding the currently effective provisions of those regulations and arrangements (as well as any similar regulations and arrangements here after issued or made) as they shall deem neces sary and appropriate for the guidance of banks concerned with the collection or payment of such items. As used in this Part, unless the context other wise requires: (a) The term “item” means any instrument for the payment of money, whether negotiable or not, which is payable in a Federal Reserve district,1 is sent by a sender or a nonbank deposi tor to a Federal Reserve Bank for handling under this Part, and is collectible in funds acceptable to the Federal Reserve Bank of the district in which the instrument is payable; except that the term does not include any check which cannot be collected at par.2 (b) The term “check” means any draft drawn on a bank and payable on demand. (c) The term “draft” means any item which is either a “draft” as defined in the Uniform Commercial Code or a “bill of exchange” as de fined in the Uniform Negotiable Instruments Law. (d) The term “bank draft” means any check drawn by one bank on another bank. (e) The term “sender”, in respect of an item, means a member bank, a nonmember clearing * This text corresponds to the Code of Federal Reglations. Title 12, Chapter II, Part 210 cited, as 12 CFR 210. The words “this Part,” as used herein, mean Regula tion J. 1 For the purposes of this Part, the Virgin Islands and Puerto Rico shall be deemed to be in or of the Second Federal Reserve District; and Guam shall be deemed to be in or of the Twelfth Federal Reserve District. 4 The Board of Governors publishes from time to time a “Federal Reserve Par List,” which indicates the banks upon which checks are collectible at par through the Federal Reserve Banks, and publishes a supplement thereto each month to show changes subsequent to the last complete list. §§ 2 1 0 .2 -2 1 0 .4 bank, a Federal Reserve Bank, an international organization, or a foreign correspondent. (f) The term “nonmember clearing bank” means a bank, not a member of the Federal Re serve System, which maintains with a Federal Reserve Bank the balance referred to in the first paragraph of section 13 of the Federal Reserve Act, and any corporation which maintains an account with a Federal Reserve Bank in con formity with the requirements of § 211.7 of Part 211 of this chapter (Regulation K ). (g) The term “international organization” means any international organization for which the Federal Reserve Banks are empowered to act as depositaries or fiscal agents subject to regula tion by the Board of Governors of the Federal Reserve System and for which a Federal Reserve Bank has opened and is maintaining an account. (h) The term “foreign correspondent” means any of the following for which a Federal Reserve Bank has opened and is maintaining an account: A foreign' bank or banker, or foreign state as defined in section 25(b) of the Federal Reserve Act (12 U.S.C. § 632), or a foreign correspon dent or agency referred to in section 14(e) of that Act (12 U.S.C. § 358). (i) The term “cash item” means: (1) Any check other than a check classified as a noncash item in accordance with paragraph (j) of this section; or (2) Any other item payable on demand and collectible at par which the Federal Reserve Bank of the district in which the item is payable may be willing to accept as a cash item. (j) The term “noncash item” means any item which the receiving Federal Reserve Bank, in its operating letters, shall have classified as an item requiring special handling and any item normally received by the Federal Reserve Bank as a cash item if such bank decides that special conditions require that it be handled as a noncash item. (k) The term “paying bank” means: (1) The bank by which an item is payable and to which it is presented, unless the item is payable or collectible through another bank and is sent to such other bank for payment or collec tion; or (2) The bank through which an item is pay able or collectible and to which it is sent for pay ment or collection. (1) The term “nonbank payor” means any payor of an item, other than a bank. REGULATION J (m ) The term “nonbank depositor” means any department, agency, instrumentality, inde pendent establishment, or officer of the United States, or any corporation other than a sender, which maintains or uses an account with a Fed eral Reserve Bank. Except as may otherwise be provided by any applicable statutes of the United States or regulations issued or arrangements made thereunder, the provisions of this Part and of the operating letters of the Federal Reserve Banks applicable to a sender are applicable to a nonbank depositor. (n) The term “State” means any State of the United States, the District of Columbia, or Puerto Rico, or any territory, possession or dependency of the United States. (o) The term “banking day” means any day during which a bank is open to the public for carrying on substantially all its banking functions. SECTION 210.3— GEN ERA L PROVISIONS In order to afford both to the public and to the banks of the country a direct, expeditious, and economical system for the collection of items and the settlement of balances, each Federal Reserve Rank shall receive and handle cash items and noncash items in accordance with the terms and conditions set forth in this Part; and the provisions of this Part and the operating letters of the Federal Reserve Banks shall be binding upon the sender of a cash item or a noncash item and shall be binding upon each collecting bank, paying bank, and nonbank payor to which the Federal Reserve Bank, or any subsequent collecting bank, presents, sends, or forwards a cash item or a noncash item received by the Federal Reserve Bank. SECTION 210.4— SENDING O F ITEMS TO FED ERA L RESERVE BANKS (a) Subject to the provisions of this Part and of the operating letters of the Federal Reserve Banks, any sender (other than a Federal Reserve Bank) may send to the Federal Reserve Bank with which it maintains or uses an account any cash item or noncash item payable in any Fed eral Reserve district; but, as permitted or required by such Federal Reserve Bank, such sender may send direct to any other Federal Reserve Bank any cash item or noncash item payable within the district of such other Federal Reserve Bank. REGULATION J (b) With respect to any cash item or noncash item, sent direct by a sender (other than a Fed eral Reserve Bank) in one district to a Federal Reserve Bank in another district, in accordance with paragraph (a) of this section, the relation ships and the rights and liabilities existing between the sender, the Federal Reserve Bank of its dis trict and the Federal Reserve Bank to which the item is sent will be the same, and the provisions of this Part will apply, as though the sender had sent such item to the Federal Reserve Bank of its district and such Federal Reserve had for warded the item to the other Federal Reserve Bank. (c) The Federal Reserve Banks shall receive cash items at par. SECTION 210.5— SENDER’S A G REEM ENT (a) By its action in sending any cash item or noncash item to a Federal Reserve Bank, the sender shall be deemed to authorize the receiving Federal Reserve Bank and any other Federal Re serve Bank or other collecting bank to which such item may be forwarded, to handle such item subject to the provisions of this Part and of the operating letters of the Federal Reserve Banks; to warrant its own authority to give such authority; and to agree that such provisions shall, insofar as they are made applicable thereto, gov ern the relationships between such sender and the Federal Reserve Banks with respect to the han dling of such item and its proceeds. (b) The sender shall be deemed to warrant to each Federal Reserve Bank handling such item (1) that it has good title to the item or is authorized to obtain payment on behalf of one who has good title, whether or not such warranty is evidenced by its express guaranty of prior in dorsements on such item, and (2) such other mat ters and things as the Federal Reserve Bank shall w arrant in respect of such item consistently with paragraph (b) of § 210.6; but the provisions of this paragraph shall not be deemed to constitute a limitation upon the scope or effect of any war ranty by a sender arising under the law of any State applicable to it; and such sender shall be deemed to agree to indemnify each Federal Re serve Bank for any loss or expense sustained (in cluding but not limited to attorneys’ fees and ex penses of litigation) resulting from the failure of such sender to have the authority to make the §§ 2 1 0 .4 -2 1 0 .5 warranty and the agreement referred to in para graph (a) of this section, resulting from any ac tion taken by the Federal Reserve Bank within the scope of its authority in handling such item, or resulting from any warranty or agreement with respect thereto made by the Federal Reserve Bank consistently with paragraph (b) of § 210.6. (c) Whenever any action or proceeding is brought in any court against a Federal Reserve Bank which has collected an item, based upon the alleged failure of the sender of such item to have the authority to make the warranty and the agreement referred to in paragraph (a) of this section, or upon any action taken by such Fed eral Reserve Bank within the scope of its author ity for the purpose of collecting such item, or upon any warranty or agreement with respect thereto made by such Federal Reserve Bank con sistently with paragraph (b) of § 210.6 of this Part, such Federal Reserve Bank may, upon the entry of a final judgment or decree in such action or proceeding, recover from the sender in the manner provided herein the amount of attorneys’ fees and other expenses of litigation actually in curred, and, in addition, any amount required to be paid by such Federal Reserve Bank under such judgment or decree, together with interest thereon. Such recovery may be effected by charging the amount thereof to any account of the sender maintained on the books of such Federal Reserve Bank (or if the sender is another Federal Reserve Bank, by entering a charge therefor against such other Federal Reserve Bank through the Interdis trict Settlement F und), provided only (1) that such Federal Reserve Bank shall have made sea sonable demand on the sender in writing to as sume the defense of the action or proceeding, and (2) that the sender shall not have made any other provision acceptable to such Federal Reserve Bank for the payment of such amount. A Federal Reserve Bank against which any such charge has been entered through the Interdistrict Settlement Fund may recover from its sender, in any case herein provided, as if the action or proceeding against the Federal Reserve Bank which entered the charge had been brought against it. The fail ure of any Federal Reserve Bank to avail itself of the remedy provided by this paragraph shall not prejudice the enforcement by it in any other manner of the indemnity agreement referred to in paragraph (b) of this section. §§ 2 1 0 .6 -2 1 0 .8 SECTION 210.6— STATUS AN D W ARRANTIES OF FED ERA L RESERVE BANK (a) A Federal Reserve Bank will act only as the agent of the sender in respect of each cash item or noncash item received by it from the sender, but such agency shall terminate not later than the time when the Federal Reserve Bank shall have received payment for the item in ac tually and finally collected funds and shall have made the proceeds available for withdrawal or other use by the sender. A Federal Reserve Bank will not act as the agent or the subagent of any owner or holder of any such item other than the sender. A Federal Reserve Bank shall not have, nor will it assume, any liability to the sender in respect of any such item and its proceeds except for its own lack of good faith or failure to exer cise ordinary care. 3 (b) By its action in presenting, or sending for presentment and payment, or forwarding any cash item or any noncash item, a Federal Reserve Bank shall be deemed to warrant to a subsequent collecting bank and to the paying bank and any other payor (1) that it has a good title to the item or is authorized to obtain payment on be half of one who either has a good title or is au thorized to obtain payment on behalf of one who has such title, whether or not such warranty is evidenced by its express guaranty of prior indorse ments on such item, and (2) to the extent pre scribed by the law of any State applicable either to the Federal Reserve Bank as a collecting bank or to the subsequent collecting bank, that the item has not been materially altered; but otherwise the Federal Reserve Bank shall not have, and shall not be deemed to assume, any liability (except for its own lack of good faith or failure to exercise ordinary care) to such paying bank or other payor. 8 N o F ed eral R eserve B an k shall be responsible to the sen d er o f any cash item , o r any o ther ow ner o r ho lder th ereof, fo r an y delay resulting fro m th e action tak en by th e F ed eral Reserve B an k in presenting, sending, o r forw ard in g the item on the basis o f ( a ) any A.B.A. tran sit n u m b er o r ro u tin g sym bol ap pearin g th ereo n at th e tim e o f its receipt by th e F ed eral Reserve Bank, w h ether inscribed by m agnetic in k o r by any o th er m eans, an d w hether o r n o t such transit o r ro u tin g sym bol is con sistent with each o th er fo rm o f designation o f a paying b a n k (o r n o n b a n k p ay o r) then ap pearing thereon, o r ( b ) any o th er fo rm o f designation o f a paying b an k ( o r n o n b a n k p a y o r) th en ap p earin g th ereon , w h ether or n o t consistent w ith A .B.A . tran sit n u m b er o r ro u tin g sym b ol th e n app earin g thereon. REGULATION J SECTION 210.7— PRESEN TM EN T FOR PAYM ENT (a) Any cash item or any noncash item may be presented for payment by a Federal Reserve Bank or a subsequent collecting bank, or may be sent by a Federal Reserve Bank or a subsequent collecting bank for presentment and payment, or may be forwarded by a Federal Reserve Bank to a subsequent collecting bank with authority to present it for payment or to send it for present ment and payment, as provided under applicable rules of State law or otherwise as permitted by this section. (b) Presentment may be made at a place where the bank by which the item is payable has re quested that presentment be made. Presentment of an item payable by a nonbank payor, other than through a paying bank, may be made at a place where the nonbank payor has requested that pre sentment be made. Presentment may also be made pursuant to any special collection agree ment not inconsistent with the terms of this Part, or may be made through a clearing house sub ject to the rules and practices thereof. (c) Any cash item or noncash item, payable in the district of the receiving Federal Reserve Bank, may be presented or sent direct to the pay ing bank, if any; may be sent direct to any place where the bank through which the item is pay able has requested that the item be sent; and, when payable by a nonbank payor other than through a paying bank, may be presented direct to the nonbank payor, but documents, securities or other papers accompanying a noncash item may not be delivered to the nonbank payor thereof before payment of the item, unless the sender has specifically authorized such delivery. (d) Any cash item or noncash item, payable in a Federal Reserve district other than the dis trict of the receiving Federal Reserve Bank, will ordinarily be forwarded to the Federal Reserve Bank of the district in which the item is payable: Provided, however, That with the concurrence of the Federal Reserve Bank of the district in which the item is payable, the receiving Federal Reserve Bank may present, send, or forward the item as if it were payable in its own district. SECTION 210.8— PRESENTM ENT OF NONCASH ITEMS FOR ACCEPTANCE Whenever a noncash item provides that it must be presented for acceptance or is payable else REGULATION J where than at the residence or place of business of the drawee, or whenever the date of payment of a noncash item depends upon presentment for ac ceptance, a Federal Reserve Bank or a subsequent collecting bank to which it has been sent by a Federal Reserve Bank may, if so instructed by the sender, present the item for acceptance in any manner authorized by law; but no Federal Reserve Bank or subsequent collecting bank shall, upon the acceptance of any such item, deliver to the drawee thereof any accompanying documents unless specifically instructed by the sender to do so. Each Federal Reserve Bank shall include in its operating letters a statement of the circum stances under which a sender may send such noncash items to the Federal Reserve Bank for presentment for acceptance, and of the terms and conditions (which shall not be inconsistent with the provisions of this Part) upon which such presentment may be made. Except as herein pro vided, no Federal Reserve Bank shall have or as sume any obligation to present any noncash item for acceptance or to send it for presentment for acceptance. §§ 2 0 8 .8 -2 1 0 .1 0 ing bank or nonbank payor to pay or remit for any such cash item or noncash item, nor for any loss resulting from the acceptance of any form of payment or remittance other than cash authorized in paragraph (a) of this section; nor shall any Federal Reserve Bank which acts in good faith and exercises ordinary care be liable for the nonpayment of, or failure to realize upon, any bank draft or other form of payment or re mittance which it may accept in accordance with paragraph (a) of this section. (c) Any bank draft or other form of payment or remittance received by a Federal Reserve Bank in payment of, or in remittance for, any cash item may likewise be handled as a cash item subject to all the applicable terms and conditions of this Part; and any bank draft or other form of remittance or payment received by a Federal Reserve Bank in payment of, or in remittance for, any noncash item may, at the option of the Federal Reserve Bank, be handled either as a cash item or as a noncash item, subject to all the ap plicable terms and conditions of this Part. SECTION 210.9— REM ITTANCE AND PAYM ENT SECTION 210.10— TIM E SCHEDULE AND AVAILABILITY OF CREDITS W ITH RESPECT TO CASH ITEMS (a) A Federal Reserve Bank may require the paying bank or collecting bank to which it has presented, sent, or forwarded any cash item or noncash item pursuant to § 210.7 to pay or remit for such item in cash, but is authorized, in its discretion, to permit such paying bank or collect ing bank to authorize or cause payment or re mittance therefor to be made by a debit to an account on the books of such Federal Reserve Bank or to pay or remit therefor in any of the following which is in a form acceptable to such Federal Reserve Bank: Bank draft, transfer of funds or bank credit, or any other form of pay ment or remittance authorized by applicable State law. A Federal Reserve Bank may require the nonbank payor to which it has presented any cash item or noncash item pursuant to § 210.7 to pay therefor in cash, but is authorized, in its discretion, to permit such nonbank payor to pay therefor in any of the following which is in a form acceptable to such Federal Reserve Bank: Cashier’s check, certified check, or other bank draft or obligation. (b) A Federal Reserve Bank shall not be liable for the failure of a collecting bank or pay (a) Each Federal Reserve Bank shall include in its operating letters a time schedule for each of its offices when the amount of any cash item received by it from any sender or sent by any sender to another Federal Reserve office for the account of such Federal Reserve Bank will be counted as reserve for the purposes of Part 204 of this chapter (Regulation D ) and become avail able for withdrawal or other use by the sender. The sender (other than a foreign correspondent) will be given either immediate credit or deferred credit for such amount in accordance with such time schedule. A foreign correspondent will ordi narily be given credit for such amount only when the Federal Reserve Bank has received pay ment for the item in actually and finally collected funds: Provided, however, That the Federal Re serve Bank may in its discretion give immediate or deferred credit for such amount in accordance with such time schedule. (b) Notwithstanding the provisions of its time schedule, a Federal Reserve Bank may in its dis cretion refuse at any time to permit the with drawal or other use of credit given for any cash item for which the Federal Reserve Bank has not REGULATION J §§ 2 1 0 .1 0 -2 1 0 .1 2 yet received payment in actually and finally col lected funds. SECTION 210.11—AVAILABILITY OF PROCEEDS OF NONCASH ITEMS (a) Credit will be given for the proceeds of a noncash item when the receiving Federal Reserve Bank has received payment for such item in actually and finally collected funds or advice from another Federal Reserve Bank of such pay ment to it, and the amount of such item shall not be counted as reserve for the purposes of Part 204 of this chapter (Regulation D ) or become available for withdrawal or other use by the sender prior to the receipt of such payment or advice, except to the extent provided in paragraph (c) of this section. (b) A Federal Reserve Bank shall be deemed to have received payment for a noncash item in actually and finally collected funds as soon as it has received payment therefor in cash or has received any pther form of payment or remittance therefor which is, or has become, final and irrevocable. (c) A Federal Reserve Bank may, prior to the time provided in paragraph (a) of this section, give credit for the proceeds of a noncash item received by it from a sender, subject to payment in actually and finally collected funds, in accord ance with a time schedule included in its operat ing letters, indicating when the proceeds of such noncash items will be counted as reserve for the purposes of Part 204 of this chapter (Regulation D ) and become available for withdrawal or other use by the sender. (d) Notwithstanding paragraph (c) of this section, a Federal Reserve Bank may, in its dis cretion, refuse at any time to permit the with drawal or other use of credit given for any non cash item for which the Federal Reserve Bank has not yet received payment in actually and finally collected funds. (e) Where a Federal Reserve Bank receives, in payment or remittance for a noncash item, a bank draft or other form of remittance or pay ment which, in accordance with paragraph (c) of § 210.9, it elects to handle as a noncash item, the proceeds of the noncash item for which the payment or remittance was made shall neither be counted as reserve for the purposes of Part 204 of this chapter (Regulation D ) nor become available for withdrawal or other use until such time as the Federal Reserve Bank receives pay ment in actually and finally collected funds for such bank draft or other form of remittance or payment, in accordance with the provisions of this section. SECTION 210.12— RETU RN OF CASH ITEMS (a) A paying bank which receives a cash item from or through a Federal Reserve Bank, otherwise than for immediate payment over the counter, shall, unless it returns such item unpaid before midnight of the banking day of receipt,4 either pay or remit therefor on the banking day of receipt, or, if acceptable to the Federal Re serve Bank concerned, authorize or cause pay ment or remittance therefor to be made by debit to an account on the books of the Federal Reserve Bank not later than the banking day for such Federal Reserve Bank on which any other accept able form of timely payment or remittance would have been received by the Federal Reserve Bank in the ordinary course: Provided, That such pay ing bank shall have the right to recover any payment or remittance so made if, before it has finally paid the item, it returns the item before midnight of its banking day next following the banking day of receipt or takes such other action to recover such payment or remittance within such time and by such means as may be provided by applicable State law: A n d further provided, That the foregoing provisions shall not extend, nor shall the time herein provided for return be extended by, the time for return of unpaid items fixed by the rules and practices of any clearing house through which the item was presented or fixed by the provisions of any special collection agreement pursuant to which it was presented. (b) Any paying bank which takes or receives a credit or obtains a refund for the amount of any payment or remittance made by it in respect of a cash item received by it from or through a Federal Reserve Bank shall be deemed (1) to warrant to such Federal Reserve Bank, to a sub sequent collecting bank, and to the sender and all prior parties that it took all action necessary to entitle it to recover such payment or remittance A cash item received by a paying bank either: (1) on a day other than a banking day for it, or (2) on a banking day for it, but— (a) after its regular banking hours, or (b) after a “cut-off hour” established by it in accordance with applicable State law, or (c) during afternoon or evening periods when it is open for limited functions only, shall be deemed to have been received by the bank on its next banking day. * REGULATION J §§ 2 1 0 .1 2 -2 1 0 .1 6 within the time or times limited therefor by the provisions of this Part, by the applicable rules and practices of any clearing house through which the item was presented, by the applicable provisions of any special collection agreement pursuant to which it was presented, and, except as a longer time may be afforded by the provisions of this Part, by applicable State law; and (2) to agree to indemnify such Federal Reserve Bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of liti gation) resulting from its action in giving such credit or making such refund, or in making any charge to, or obtaining any refund from, the sender. No Federal Reserve Bank shall have any responsibility to such paying bank or any subse quent collecting bank or to the sender of the item or any other prior party thereon for determining whether the action hereinabove referred to was timely. stances beyond its control, any bank (including a Federal Reserve Bank) shall be delayed beyond the time limits provided in this Part or the operating letters of the Federal Reserve Banks, or prescribed by the applicable law of any State in taking any action with respect to a cash item or a noncash item, including forwarding such item, presenting it or sending it for presentment and payment, paying or remitting for it, return ing it or sending notice of dishonor or nonpay ment, or making or providing for any necessary protest, the time of such bank, as limited by this Part or the operating letters of the Federal Re serve Banks, or by the applicable law of any State, for taking or completing the action thereby delayed shall be extended for such time after the cause of the delay ceases to operate as shall be necessary to take or complete the action, provided the bank exercises such diligence as the circum stances require. SECTION 210.13— CHARGEBACK OF U NPAID CASH ITEMS AN D NONCASH ITEMS SECTION 210.15— EFFEC T OF DIRECT PRESENTM ENT OF CERTAIN W ARRANTS If a Federal Reserve Bank does not receive payment in actually and finally collected funds for any cash item or noncash item for which it gave credit subject to payment in actually and finally collected funds, the amount of such item shall be charged back to the sender, regardless of whether or not the item itself can be returned. In such event, neither the owner or holder of any such item nor the sender shall have the right of recourse upon, interest in, or right of payment from, any reserve balance, clearing account, de posit account, or other funds of the paying bank or of any collecting bank, in the possession of the Federal Reserve Bank. No draft, authorization to charge, or other order, upon any reserve bal ance, clearing account, deposit account, or other funds in the possession of a Federal Reserve Bank, issued for the purpose of paying or remit ting for any cash items or noncash items handled under the terms of this Part, will be paid, acted upon, or honored after receipt by such Federal Reserve Bank of notice of suspension or closing of the bank making the payment or remittance for its own or another’s account. SECTION 210.14—TIMELINESS OF ACTION If, because of interruption of communication facilities, suspension o f payments by another bank, war, emergency conditions or other circum Whenever a Federal Reserve Bank exercises its option to present direct to the payor any bill, note or warrant issued and payable by any State or any county, district, political subdivision or municipality of any State, such bill, note or w arrant being a cash item not payable or col lectible through a bank, the provisions of §§ 210.9, 210.12, and 210.13 and the operating letters of the Federal Reserve Banks shall be applicable to the payor as if it were a paying bank, the provi sions of § 210.14 shall be applicable to it as if it were a bank, and each day on which the payor shall be open for the regular conduct of its affairs or the accommodation of the public shall be treated as if it were a banking day for it, within the meaning and for the purposes of § 210.12. SECTION 210.16— OPERATING LETTERS Each Federal Reserve Bank shall issue operat ing letters (sometimes referred to as operating circulars or bulletins), not inconsistent with this Part, governing the details of its operations in the handling of cash items and noncash items, and containing such other matters as are required by the provisions of this Part. Such letters may, among other things, classify cash items and non cash items, require separate sorts and letters, and provide different closing times for the receipt of different classes or types of cash items and non cash items. STATUTORY APPENDIX REGULATION J STATUTORY APPENDIX SECTION 13 OF THE FEDERAL RESERVE ACT Section 13 provides in part as follows: 1 1. Receipt of deposits and collections Sec. 13. Any Federal reserve bank may re ceive from any of its member banks, and from the United States, deposits of current funds in lawful money, national-bank notes, Federal re serve notes, or checks, and drafts, payable upon presentation, and also, for collection, maturing notes and bills; or, solely for purposes of exchange or of collection, may receive from other Federal reserve banks deposits of current funds in lawful money, national-bank notes, or checks upon other Federal reserve banks, and checks and drafts, pay able upon presentation within its district, and ma turing notes and bills payable within its district; or, solely for the purposes of exchange or of col lection, may receive from any nonmember bank or trust company deposits of current funds in lawful money, national-bank notes, Federal reserve notes, checks and drafts payable upon presentation, or maturing notes and bills: Provided, Such nonmember bank or trust company maintains with the Federal reserve bank of its district a balance suffi cient to offset the items in transit held for its ac count by the Federal reserve bank: Provided further, That nothing in this or any other section of this Act shall be construed as prohibiting a member or nonmember bank from making reason able charges, to be determined and regulated by the Board of Governors of the Federal Reserve System, but in no case to exceed 10 cents per $100 or fraction thereof, based on the total of checks and drafts presented at any one time, for collec tion or payment of checks and drafts and remis sion therefor by exchange or otherwise; but no such charges shall be made against the Federal reserve banks. [U.S.C., title 12, sec. 342.] * * * * * SECTION 16 OF THE FEDERAL RESERVE ACT Section 16 provides in part as follows: * * * * * 13. Checks and drafts to be received on deposit at par Every Federal reserve bank shall receive on deposit at par from members banks or from Federal Reserve banks checks and drafts drawn 1 Paragraph numbers and captions have been added to facilitate reference. upon any of its depositors, and when remitted by a Federal reserve bank, checks and drafts drawn by any depositor in any other Federal reserve bank or member bank upon funds to the credit of said depositor in said reserve bank or member bank. Nothing herein contained shall be construed as prohibiting a member bank from charging its actual expense incurred in collecting and remitting funds, or for exchange sold to its patrons. The Board of Governors of the Federal Reserve System shall, by rule, fix the charges to be collected by the member banks from its patrons whose checks are cleared through the Federal reserve bank and the charge which may be im posed for the service of clearing or collection rendered by the Federal reserve bank. [U.S.C., title 12, sec. 360.] 14. Transfer of funds among Federal Reserve banks The Board of Governors of the Federal Re serve System shall make and promulgate from time to time regulations governing the transfer of funds and charges therefor among Federal reserve banks and their branches, and may at its discretion exercise the functions of a clearing house for such Federal reserve banks, or may designate a Federal reserve bank to exercise such functions, and may also require each such bank to exercise the functions of a clearing house for its member banks. [U.S.C., title 12, sec. 248(o).] * * * * * SECTION 11 OF THE FEDERAL RESERVE ACT Section 11 provides in part as follows: Sec. 11. The Board of Governors of the Fed eral Reserve System shall be authorized and em powered: * * * * * 10. Rules and regulations (i) To require bonds of Federal reserve agents, to make regulations for the safeguarding of all collateral, bonds, Federal reserve notes, money or property of any kind deposited in the hands of such agents, and said board shall perform the duties, functions, or services specified in this Act, and make all rules and regulations necessary to enable said board effectively to perform the same. [U.S.C., title 12, sec. 248 (i).] * * * * * STATUTORY APPENDIX REGULATION J SECTION 14 OF THE FEDERAL RESERVE ACT 6 . Definitions For the purposes of this section, * * * (2 ) the term “foreign state” includes any foreign govern * * * * * ment or any department, district, province, county, possession, or other similar governmental Every Federal reserve bank shall have power: organization or subdivision of a foreign govern ment, and any agency or instrumentality of any * * * * * such foreign government or of any such organi zation or subdivision; (3) the term “central 6. Foreign correspondents and agencies bank” includes any foreign bank or banker au (e) To establish accounts with other Federal thorized to perform any one or more of the func reserve banks for exchange purposes and, with tions of a central bank; * * * the consent or upon the order and direction of [U.S.C., title 12, sec. 632.] the Board of Governors of the Federal Reserve System and under regulations to be prescribed OTHER STATUTORY PROVISIONS by said board, to open and maintain accounts in foreign countries, appoint correspondents, and es Bretton Woods Agreements Act (22 U.S.C. 286d): tablish agencies in such countries wheresoever it S ec . 6. A ny Federal Reserve bank w hich is re may be deemed best for the purpose of purchas quested to do so by the Fund or the Bank shall act ing, selling, and collecting bills of exchange, and as its depository or as its fiscal agent, and the Board to buy and sell, with or without its indorsement, o f Governors o f the Federal Reserve System shall supervise and direct the carrying out o f these func through such correspondents or agencies, bills of tions by the Federal Reserve banks. exchange (or acceptances) arising out of actual commercial transactions which have not more Inter-American Development Bank Act (22 than ninety days to run, exclusive of days of U.S.C. 283d): grace, and which bear the signature of two or S e c . 6. A ny Federal Reserve bank which is re more responsible parties, and, with the consent quested to do so by the Bank shall act as its de of the Board of Governors of the Federal Re pository or as its fiscal agent and the Board o f G ov ernors o f the Federal Reserve System shall supervise serve System, to open and maintain banking ac and direct the carrying out o f these functions by the counts for such foreign correspondents or agen Federal Reserve banks. cies, or for foreigh banks or bankers, or for International Development Association Act (22 foreign states as defined in section 25 (b) of this U.S.C. 284d) : Act. Whenever any such account has been opened or agency or correspondent has been appointed S ec . 6. A ny Federal Reserve bank which is re by. a Federal reserve bank, with the consent of or quested to do so by the A ssociation shall act as its depository or as its fiscal agent, and the Board o f under the order and direction of the Board of Governors o f the Federal Reserve System shall Governors of the Federal Reserve System, any supervise and direct the carrying out o f these func other Federal reserve bank may, with the consent tions by the Federal Reserve banks. and approval of the Board of Governors of the International Finance Corporation Act (22 U.S.C. Federal Reserve System, be permitted to carry on 2 8 2 d ): or conduct, through the Federal reserve bank opening such account or appointing such agency S e c . 6. A ny Federal Reserve bank which is re or correspondent, any transaction authorized by quested to do so by the Corporation shall act as its depository or as its fiscal agent, and the Board o f this section under rules and regulations to be pre G overnors o f the Federal Reserve System shall super scribed by the board. vise and direct the carrying out o f these functions Section 14 provides in part as follows: by the Federal Reserve banks. [U .S.C ., title 12, sec. 358.] * SECTION * * * * 25(b) OF THE FEDERAL RESERVE ACT Section 25(b) provides in part as follows: * * * * * Asian Development Bank Act (22 U.S.C. 2 8 5 d ): S ec . 6. A ny Federal Reserve bank which is re quested to do so by the Bank shall act as its deposi tory or as its fiscal agent, and the Board o f G over nors o f the Federal Reserve System shall supervise and direct the carrying ou t o f these functions by the Federal Reserve banks.
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