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Federal Reserve bank
OF DALLAS
WILLIAM H. WALLACE

DALLAS, TEXAS 75222

F IR S T V IC E P R E S ID E N T

October 16, 1985
Circular 85-127
TO:

The Chief Executive Officer of all
depository institutions in the
Eleventh Federal Reserve District

SUBJECT
Request for public comnent on a temporary amendment to Regulation J
DETAILS
As announced in our Circular 85-125 dated October 3, 1985, the
Federal Reserve Board adopted a temporary amendment to Subpart A of
Regulation J creating a uniform holiday schedule -- ten Federal holidays and
all Saturdays and Sundays -- to be applied to the new notification of
nonpayment provision that went into effect October 1. Prior to adoption of a
final rule, the Board has requested public comment on the temporary amendment.
Comments should be addressed to Mr. William W. Wiles, Secretary,
Board of Governors of the Federal Reserve System, 20th & C Streets, N.W.,
Washington, D.C. 20551. Comments must be received by November 4, 1985, and
should refer to Docket No. R-0552.

ATTACHMENTS
Attached are the Board's press release and the notice as published in
the Federal Register.

MORE INFORMATION
For further information on the amendment, please contact the
following individuals: Robert L. Whitman, (214) 698-4357 at the Head Office;
Robert W. Schultz, (915) 544-4370 at the El Paso Branch; Vernon L. Bartee,
(713) 659-4433 at the Houston Branch; or John A. Bullock, (512) 224-2141 at
the San Antonio Branch.
Sincerely yours,

For additional copies of any circular please contact the Public A ffairs Departm ent at (214) 6 51 -6 2 8 9 . Banks and others are
encouraged to use the following in coming W A TS numbers in contacting this Bank (800) 4 4 2 -7 1 4 0 (in trastate) and (800)
5 2 7 -9 2 0 0 (interstate).

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

FEDERAL RESERVE press release

For immediate release

Octo

The Federal Reserve Board today announced a
Regulation J to provide for a

temporary amendment to

uniform holiday schedule that will apply to its

new notice of nonpayment provisionthat went into effect on October 1.
On February 8, the Board

amended Regulation J to require that a

paying bank provide notice that a check is being returned unpaid to the bank
of first deposit ("depositary bank") by midnight of the second banking day
following the paying bank's deadline for return of the check to its Reserve
Bank.
Because of problems that arise due to different banking holiday
schedules across the country —
days by many institutions —

for example, Saturdays are regarded as banking

the Board has provided, effective immediately,

for a uniform holiday schedule -- 10 Federal holidays and all Saturdays and
Sundays.
Prior to adoption of a final rule, the Board requested public
comment on the temporary amendment by November 4, 1985.
The Board's notice is attached.
-

Attachment

0-

FEDERAL RESERVE SYSTEM
REGULATION J
12 C.F.R. Part 210
[Docket No. R-0552]
COLLECTION OF CHECKS AND OTHER ITEMS
AND WIRE TRANSFERS OF FUNDS

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Temporary rule; request for comment.

SUMMARY:

The Board has adopted an amendment

to subpart

A of

Regulation J creating a standard holiday schedule to be applied
to the recently adopted notification of nonpayment provision.
Although the temporary rule is effective immediately the Board
is

requesting

comments

from

the public

prior

to adopting

a

final rule.
DATE:

The

temporary

rule

is effective

on October

3,

1985.

Comments must be received by November 4, 1985.
ADDRESS: Comments, which should refer to Docket No. R-0552, may
De mailed
System,
Mr.

to the Board

of

Governors

of the

20th & C Sts., N.W. Washington,

William

delivered

to

W.

Wiles,

Room

Secretary.

B-2223

between

D.C.

Comments
8:45

a.m.

Federal
20551,
may
and

Reserve
attention

also
5:15

be
p.m.

Comments may be inspected at Room B-1122 between 8:45 a.m.

and

5:15 p.m. except as provided in § 261.6(a) of the Board's Rules
Regarding Availability of Information, 12 C.F.R. § 261.6(a).
FOR FURTHER INFORMATION CONTACT:

Elliott C. McEntee,

Director, Division of Federal Reserve Bank Operations

Associate

2-

-

(202/452-3926);

Joseph R.

Alexander,

Attorney,

Legal

Division

(202/452-2489):

or Joy W.

O'Connell,

Telecommunication Device

for the Deaf (202/452-3244).
SUPPLEMENTARY
amended

INFORMATION:

§ 210.12

of

On

February

Regulation

J,

12

8,

1985,

C.F.R.

§

the

Board

210.12,

to

strengthen the requirement that paying banks provide notice of
nonpayment
presented
(1985).

when

they

through

item

the

The amendment

notice to the bank
the

are

is being

returning

Federal

large-dollar

Reserve.

requires

5734

50

Fed.

Reg.

bank

to provide

("depositary bank")

unpaid by midnight

12 C.F.R.

that

of the second

banking day following the paying bank's deadline
the item to its Reserve Bank.

items

paying

the

of first deposit
returned

cash

for return of

§ 210.12(c)(2).

The

requirement took effect on October 1, 1985.
While
notification
discussed

the

Board

amendment,

was

three

seeking
of

the

comment

260

the problem that could be the

on

comments
result

the
received

of different

holiday schedules observed by banks in different regions in the
country.

These commenters

suggested that

the

Board

override

state and local holidays and impose a uniform holiday schedule
nationwide.
that

After examining this

it was not necessary

or

issue,

desirable

the Board determined
to

impose

a uniform

schedule at that time.
As Reserve Banks refined
complex

operations

procedures

on

required

October

1,

to

the details of the new and
implement

however,

they

the

notification

realized

that

the

3-

-

discrepencies among banks as to what constitutes
create

greater problems

banking days

for paying banks than had previously

oeen anticipated and that these problems arise more quickly and
more frequently than had previously been assumed.

This results

from the way in which the notification procedure is designed to
wor k .
The

notification

of

nonpayment

requirement

provides

that the paying bank must notify the depositary bank if it is
not going to pay a cash item.
the depositary
banking

bank by midnight

day following

the paying

The notice must be received by

bank

for

of the

the deadline

return of

the

paying

the

bank's

regulation

item.

For

second

imposes on

example,

if a

paying bank receives a check from a Reserve Bank on Monday,
must

return

the

check

to

the

Reserve

Bank

by

midnight

it

on

Tuesday and provide notice of nonpayment to the depositary bank

by

midnight Thursday.
Regulation J defines the term "banking day" to mean "a

day during which a bank is open to the public for carrying on
substantially
§ 210.2(d)— ^

all

of

This

its

banking

definition

functions."

means

that

the

12

C.F.R.

business

schedule of the paying bank will drive the time at which notice
must be received by the depositary bank.

For example,

if the

paying bank in the previous illustration is closed on

1/
This definition is the same as that
state law.
See U.C.C. § 4-104(l)(c).

generally

found

in

-

Wednesday,

it would

only

be

4-

required

to provide

notice

of

nonpayment to the depositary bank by midnight Friday.
The definition may cause problems
are

open

for

business

community is closed.
of their banking
true

on

days

that

functions on Saturdays.

If a bank

Wednesday,

the

This

banking

is especially

regular midweek

that opens on Saturday

it would

of

if they

For example, many banks are open for most

for banks that normally observe

days.

most

for banks

closing

received a check on

have to return the check

to its Reserve

Bank by midnight Thursday and provide notice to the depositary
bank by midnight Saturday.

If the depostiary bank were closed

on that Saturday, notice could be made on the following Monday,
but

it could be difficult

for

the

paying

bank

whether the depositary bank was closed or open,
the

two

banks

Nevertheless,

are

separated

by

any

great

to determine
especially if
distance.

in some cases Saturday would count as a banking

day for purposes of providing the notice.
In
service

on

order

to

Saturdays

provide
for

the

paying

return
banks,

item
the

notification

Reserve

Banks

estimate that they would incur costs of up to $50,000 for each
Saturday.

In short, the costs for Reserve Banks to provide the

return item service for paying banks on Saturdays in relation
to the number

of

notices

to be provided

would

result

in a

misallocation of economic resources in the payments mechanism.

5-

-

Private
provide

correspondent

banks

a return item notification

provide a complete service,

are

also

service.

planning

If they are

to
to

they too would have to remain open

on Saturdays and nonstandard holidays to provide the service on
behalf of their customers.

Given the relatively small

volume

expected on these days, this would also be a costly service for
correspondent banks to provide.
The alternative to the Reserve Banks or other service
providers being open on Saturdays while not going forward with
the proposed temporary rule would be to require paying banks to
fend for themselves on Saturdays.

This is likely to be very

burdensome

to the paying

banks.

It

establish,

for

one

each

at

least

day

would
week,

require
the

them to

elaborate

procedures necessary for making notice of nonpayment
banks

open

difficulty

on Saturdays.

This

would

in ascertaining whether or

be

to other

complicated

by the

not the depositary bank

is open and able to receive notices on Saturdays.
In

order

to

alleviate

these

problems

and

similar

problems that arise with respect to certain holidays which may
not be observed

uniformly,

the Board

is adopting

a standard

holiday schedule for purposes of calculating the deadline
the notice of nonpayment.

The Board is not attempting at this

time to establish a nationwide bank holiday schedule
purposes.

Under

the

for

amendment,

the

following

days

for all
will not

-

be

considered

banking

days

for

6-

purposes

of

the

notice

of

nonpayment:
All Saturdays,
All Sundays,
New Year's Day (January 1),
Martin Luther King's Birthday (third Monday in
January),
Washington's Birthday (third Monday in
February),
Memorial Day (last Monday in May),
Independence Day (July 4),
Labor Day (first Monday in September),
Columbus Day (second Monday in October),
Veterans' Day (November 11),
Thanksgiving Day (fourth Thursday in
November), and
Christmas Day (December 25).
This schedule follows that observed by the federal government.
See 5 U.S.C. § 6103.
If a fixed
Saturday,

holiday

(such

as

Christmas)

falls

the holiday will be observed on the previous

if such a holiday falls on a Sunday,
following Monday.

The

whether

there

Friday;

it will be observed on the

This practice also follows that adopted by

the federal government.
1971).

on a

Board,
are

See, Exec.

however,
other

Order No. 11 ,582

specifically

alternatives

for

seeks

(Jan.

comment

handling

1,

on

such

occurrences.
Immediate adoption of this rule is required
potential

problems

arising

on

October

5,

1985,

Saturday on which the notification would apply.
this
banks

amendment will
that open

on

ease a regulatory burden
Saturday will

be

given

an

the

to avoid
first

In addition,

in that
extra

paying
day

to

-

comply

with

the

circumstances.
providing

the

remaining

open

notice

It

will

requirements
also

notification
on

7-

relieve

service

Saturdays.

For

of

under

certain

correspondent
the

these

banks

responsibility

reasons,

the

of

Board

finds that application of the notice and public participation
provisions of 5 U.S.C.
to the public

§ 553 to this action would be contrary

interest and that good cause exists

for making

this action effective immediately.
This regulation will not have any significant

impact

on a substantial number of small entities.
LIST OF SUBJECTS INDEX TERMS:

Banks; Banking;

Federal Reserve

System.
Pursuant to its authority under
Reserve Act, 12 U.S.C.
12 U.S.C.

§§ 248(o)

§ 13 of the

Federal

§ 342, § 16 of the Federal Reserve Act,

and

360,

§ 11 (i ) of the

Federal

Reserve

Act, 12 U.S.C. § 248(i), and other provisions of law, the Board
hereby amends 12 C.F.R.

§ 210.12(c)

by adding a new paragraph

at the end thereof as follows:
(10)
banking

days

The
for

following
purposes

days
of

the

shall

not

deadline

nonpayment:

Saturdays and Sundays,

in January,

the third Monday in February,

December 25.

November

11,

for

considered
notice

of

January 1, the third Monday
the last Monday in

May, July 4, the first Monday in September,
in October,

be

the second Monday

the fourth Thursday in November,

and

If January 1, July 4, November 11, or December 25

-

fall on a Saturday,
a banking day

8-

the previous Friday shall not be considered

for purposes of this

subsection.

If January 1,

July 4, November

11, or December 25 fall on a Sunday,

following

shall

Monday

not

be

considered

a banking

the next
day

for

purposes of this subsection.
*

*

*

*

*

By Order of the Board of Governors of the the Federal
Reserve System,

October 3, 1985.

(signed) William W. Wiles

----- wTTT lain W. Wiles
Secretary of the Board