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Federal R eserve Bank
OF DALLAS
W ILLIAM
H. WALLACE
DALLAS, T EXA S 7 5 2 2 2
f i r s t v ic e p r e s id e n t
and c h ie f o p e ra tin g o f f ic e r
December 26, 1990
Circular 90-100
TO:
The Chief Operating Officer of
each financial institution in the
Eleventh Federal Reserve District
SUBJECT
Request for Public Comment on Interim Amendments
to Regulation CC to Conform the Regulation to a Recent Amendment
to the Expedited Funds Availability Act
DETAILS
The Board of Governors of the Federal Reserve System
is requesting
comments on interim amendments it has adopted to Regulation CC
(Availability
of Funds and Collection of Checks). The amendments conform the regulation to
a recent amendment to the Expedited Funds Availability Act, pending adoption
of a final rule.
The amendment to the Expedited Funds Availability Act, which was
enacted on November 28, 1990, extends the availability schedules for deposits
to nonproprietary automated teller machines (ATMs) for a two-year period.
Because the amendment became effective upon enactment, the Board did not have
an opportunity to publish proposed amendments for comment before the effective
date of the amendment to the act. The amendments to Regulation CC require
banks wishing to take advantage of the extended hold for deposits at nonpro
prietary ATMs to disclose the hold extension to their customers in their
initial disclosures.
The Board must receive comments by January 11, 1991.
Comments
should be addressed to William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, 20th and C Streets, N.W., Washington, D.C. 20551. All
comments should refer to Docket No. R-0717.
ATTACHMENT
A copy of the B o a r d ’s notice as it appears on pages 50816-19, Vol.
55, No. 238, of the Federal Register dated Tuesday, December 11, 1990, is
attached.
For additional copies of any circular, please contact the Public Affairs Department at (214) 651-6289. Bankers and others are encouraged to use the following
toll-free number in contacting the Federal Reserve Bank of Dallas: (800) 333-4460.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
MORE INFORMATION
For additional information, please contact Robert Whitman, (214)
L.
698-4357, at the Dallas Office; Eloise Guinn, (915) 544-4730, at the El Paso
Branch; Luke E. Richards, (713) 652-1544, at the Houston Branch; or Herb
Barbee, (512) 978-1402, at the San Antonio Branch.
For additional copies of
this circular, please contact the Public Affairs Department at (214) 651-6289
Sincerely yours,
50816
Federal Register / Vol. 55, No. 238 / Tuesday, December 11, 1990 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12CFR Part 229
[ R e g u la tio n CC; D o c k e t N o. R -0 7 1 7 J
RIN 7 100-AB01
Availability of Funds and Collection of
Checks
Board of Governors of the
Federal Reserve System.
ACTION: Interim rule with request for
comment.
AGENCY:
s u m m a r y : The Board is amending
Regulation CC to conform to recent
amendments to the Expedited Funds
Availability Act (“Act”) (see the
Cranston-Gonzales National Affordable
Housing Act, Pub. L. No. 101-625,
§ 1001). The amendments extend the
availability schedules for deposits to
nonproprietary automated teller
machines ("ATMs") for a period of two
years. The amendments to the Act were
signed into law on November 28,1990,
with a retroactive effective date of
September 1,1990. The Board has
adopted these conforming changes to
Regulation CC on an interim basis. The
Board is requesting comments on the
interim rule pending adoption of a final
rule.
DATES: Effective date: September 1,
1990. Comment date: Comments must be
submitted on or before January 11,1991.
ADDRESSES: Comments, which should
refer to Docket No. R-0717, may be
mailed to the Board of Governors of the
Federal Reserve System, 20th and C
Streets, NW„ Washington, DC 20551,
Attention: Mr. William W. Wiles,
Secretary; or may be delivered to Room
B-2223 between 8:45 a.m. and 5 p.m. All
comments received at the above address
will be included in the public file and
may be inspected at Room B-1122
between 8:45 a.m. and 5:15 p.m.
FOR FURTHER INFORMATION CONTACT:
Louise L. Roseman, Assistant Director
(202/452-3874), or Kathleen M. Connor,
Senior Financial Services Analyst (202/
452-3917), Division of Federal Reserve
Bank Operations; Oliver Ireland,
Associate General Counsel (202/4523025), or Stephanie Martin, Attorney
(202/452-3195), Legal Division. For
information regarding modifications to
disclosures or Appendix C, contact
Thomas J. Noto, Staff Attorney (202/
452-3667), or Jane E. Ahrens, Staff
Attorney (202/452-3667), Division of
Consumer and Community Affairs. For
the hearing impaired only:
Telecommunications Device for the
Deaf, Dorothea Thompson (202/4523544).
The
Expedited Funds Availability Act
specifies the time periods within which
funds deposited at ATMs must be made
available for withdrawal. Different rules
applied under the temporary schedule
(which was effective from September 1,
1988, to August 31,1990) to deposits at
nonproprietary ATMs 1 than to deposits
at proprietary ATMs, because of
operational differences in the way these
deposits are processed. During
consideration of the Act, banks reported
to the Congress on the processing
limitations associated with accepting
deposits at nonproprietary ATMs. They
indicated that the account-holding bank
does not have the information necessary
to place holds on nonproprietary ATM
deposits because the deposits are
removed and processed by the ATM
operator rather than the account-holding
bank. Given these limitations, the Act
allowed the account-holding bank to
treat any such deposits as though they
were composed of nonlocal checks
under the temporary schedule. At that
time, the Congress anticipated that the
processing limitations that necessitated
the special availability rule for
nonproprietary ATM deposits under the
temporary schedule would be addressed
by the time the permanent schedule
became effective in September 1990.
Therefore, under the permanent
schedule, deposits at nonproprietary
ATMs generally had to be made
available for withdrawal within the
same time periods as deposits made at
staffed teller facilities.
- During the past two years, ATM
networks, banks, and the Board have
investigated a number of potential
alternatives both to address the
processing limitations and to facilitate
compliance with the permanent
schedule. A viable systems solution to
address the processing limitations has
not been identified. All of the identified
solutions are costly and would likely
result in increased fees for customers
who make deposits at nonproprietary
ATMs. The possible system solutions
would degrade the efficiency of shared
ATM networks and may slow the
collection of checks, which would be
contrary to the intent of the Act.
In addition, depository institutions
and ATM operators have expressed
concern that the potential for fraud will
SUPPLEMENTARY INFORMATION:
1 A nonpraprivtory A T M is defined in the Act «is
one that is not proprietary. !n the Act, the term
"proprietary ATM" means an autom ated teller
machine that is (I) located at or adjacent to a
branch of the receiving institution or in d o s e
proximity, as defined by the Board, or (2 ) ow ned by,
operate d exclusively for. or operated by the
receiving institution.
Federal Register / Vol. 55, No. 238 / Tuesday, December 11, 1990 / Rules and Regulations
increase if institutions must comply with
the perm anent availability schedule for
nonproprietary ATMs. Under the
perm anent availability schedule,
second-business-day availability is
required for local checks. Thus, an
account-holding bank that could not
ascertain the composition of deposits at
nonproprietary ATMs would have to
provide second-business-day
availability for all deposits made at
nonproprietary ATMs in order to ensure
compliance with the availability
schedules, even though longer holds
could apply with respect to similar
deposits, i.e., nonlocal checks, made at a
staffed teller facility. Thus, deposits of
nonlocal checks at nonproprietary
ATMs would be available for
w ithdraw al several days before the
checks could be presented and returned,
and therefore such deposits would be an
attractive vehicle for check fraud.
Substantial increases in operating costs
or fraud losses could lead some
institutions to cease accepting deposits
at nonproprietary ATMs, thereby
limiting a convenient consumer banking
service.
Based on this research and analysis,
the Board submitted two reports 2 on
this issue to the Congress that
recommended that the Congress amend
the Act to treat nonproprietary ATM
deposits under the perm anent schedule
in the same m anner as such deposits
were treated under the temporary
sc hedule; i.e., permit banks to make
deposits at nonproprietary ATMs
available for w ithdraw al as if they were
nonlocal checks (not later than the fifth
business day following the day of
deposit). ATM networks and
participating institutions also have made
this recommendation to the Congress.
On November 28,1990, the President
signed into law the Cranston-Gonzales
National Affordable Housing Act (Pub.
L. 101-625; § 1001), which amended the
Expedited Funds Availability Act to
extend the schedules applicable to
deposits at nonproprietary ATMs for a
two-year period. The Board is amending
Regulation CC to conform to this recent
amendment of the Act.
Section 229.12 of Regulation CC sets
forth the permanent availability
schedule under which funds deposited
in an account by local and nonlocal
checks must be made available for
withdrawal. A new § 229.12(f) has been
added to provide a special rule for
* The reports on this subject w ere transmitted to
Congress in O ctober 1989 and July 1990. An earlier
report submitted in O ctober 1908 provided
bacKground information on the processing of
deposits at nonproprietary ATMs but did not
include a legislative recommendation because there
w a s limitea research available at that time.
deposits made at nonproprietary ATMs.
Section 229.12(f) provides that during the
period from September 1,1990, through
November 27,1992, a depositary bank
may treat all deposits made by its
customers at a nonproprietary ATM as
though the deposits were nonlocal
checks under the permanent schedule,
i.e., make them available by the fifth
business day after the day of deposit.
Effective November 28,1992, deposits of
cash, "next-day” checks, and local
checks at a nonproprietary ATM must
be made available by the second
business day following the banking day
of deposit, and nonlocal checks
deposited at a nonproprietary ATM
must continue to be made available by
the fifth business day following the
banking day of deposit. This rule does
not apply to deposits made at
proprietary ATMs.
The Board also has made revisions to
other paragraphs of § 229.12 to conform
that section to the statutory
requirements of the Act. Paragraphs (a),
(b), (c), and (d) of § 229.12 were
amended to add cross-references to the
new paragraph (f) as well as to other
paragraphs. In addition, in paragraph
(b), which lists the types of deposits that
must be accorded two-day availability
under the permanent schedule, the
Board has removed the language, “a
check drawn on the Treasury of the
United States that is deposited at a
nonproprietary ATM.” Deposits of these
checks are now governed by the
provisions of new paragraph (f) and are
subject to a five-day availability
schedule until November 27,1992, and a
two-day availability schedule after that
date.
Section 229.16(b)(5) requires banks
wishing to take advantage of the
extended hold for deposits at
nonproprietary ATMs to disclose this to
their customers in their initial
disclosures. Model Clause C-10, which
can be used to make this disclosure, has
been revised to reflect the new rules for
nonproprietary ATM deposits.
Conforming changes have also been
made to the commentary to Appendix C
and the commentary to § 229.16.
Section 229.18(e) requires banks to
disclose changes in their availability
policy to their consumer account
holders. Changes other than those that
result in faster availability must be
disclosed 30 calendar days before they
are implemented. Accordingly, banks
wishing to take advantage of the
extended hold for nonproprietary ATM
deposits must provide 30-day advance
notice to their consumer account
holders. This requirement may be
fulfilled by mailing Model C-10 prefaced
50817
with language indicating the effective
date of the change.
The Board believes that it is
necessary to amend the regulation with
an interim amendment, so that the
regulation conforms to the statutory
requirements, and so that banks that
permit their customers to make deposits
at nonproprietary ATMs can rely on the
Board’s regulation in providing
availability in accordance with the
amended requirements. If the Board's
rule is not effective immediately, banks
that wish to take advantage of the
provisions of the Act regarding
nonproprietary ATMs, which reflect the
intent of the Congress to reduce the risk
for banks of accepting deposits at
nonproprietary ATMs, would be in
violation of Regulation CC because the
current provisions call for faster
availability of these deposits than is
required under the amended Act. There
was no opportunity for the Board to
publish proposed regulations for
comment prior to the effective date of
the amendment to the Act, which was
effective upon enactment. Accordingly,
the Board, for good cause, finds that the
notice and public comment procedure
normally required is impractical and
contrary to the public interest under 5
U.S.C 553(b)(B). The Board further finds
that, for the same reasons, there is good
cause under 5 U.S.C. 553(d)(3) to make
the interim amendment effective on
September 1,1990, without regard for
the 30-day period provided for in U.S.C.
553(d).
Initial Regulatory Flexibility Analysis:
The Regulatory Flexibility Act (5
U.S.C. 601-612) requires an agency to
publish an initial regulatory flexibility
analysis with any notice of proposed
rulemaking. Two of the requirements of
an initial regulatory flexibility analysis
(5 U.S.C. 603(b)), a description of the
reasons why the action by the agency is
being considered and a statement of the
objectives of, and legal basis for, the
proposed rule, are contained in the
supplementary information above. The
Board's interim rule requires no
additional reporting or recordkeeping
requirements, nor are there relevant
federal rules that duplicate, overlap, or
conflict with the proposed rule.
Another requirement for the initial
regulatory flexibility analysis is a
description of, and where feasible, an
estimate of the number of small entities
to which the proposed rule shall apply.
The interim rule will apply to all
depository institutions, regardless of
size, as required by the amendments to
the Expedited Funds Availability Act.
The rule should not have a signficant
negative economic impact on small
50818
Federal Register / Vol. 55, No. 238 / Tuesday, December 11, 1990 / Rules and Regulations
institutions, but rather will decrease the
risk to all depositary banks by enabling
them to impose longer holds on deposits
made to nonproprietary ATMS.
List of Subjects in 12 CFR Part 229
Banks, banking, Federal Reserve
System, Reporting and recordkeeping
requirements.
For the reasons set out in the
preamble, 12 CFR part 229 is amended
as follows:
PART 229—[AMENDED]
1. The authority citation for part 229
continues to read as follows:
Authority: Title VI of Pub. L. 100-86,101
S tat. 552, 635,12 U.S.C. 4001 e t seq.
2. In § 229.12, paragraph (a) and the
introductory text to paragraph (b) are
revised, paragraph (b)(3) is removed,
paragraphs (b)(4) and (b)(5) are
redesignated as (b)(3) and (b)(4), newly
redesignated paragrah (b)(4) is revised,
paragraph (c)(1) introductory text and
the first and third sentences of
paragraph (d) are revised, and a new
paragraph (f) is added to read as
follows:
§ 229.12
Permanent availability schedule.
(a) Effective date. Except as provided
in paragraph (f), the permanent
availability schedule contained in this
section is effective September 1,1990.
(b) Local checks and certain other
checks. Except as provided in
paragraphs (d), (e), and (f) of this
section, a depositary bank shall make
funds deposited in an account by a
check available for withdrawal not later
than the second business day following
the banking day on which funds are
deposited, in the case of—
*
*
*
*
*
*
*
*
■*
*
* * * *
(f) Deposits at nonproprietary ATMs.
(1)(i) A depositary bank shall make
funds deposited in an account at a
nonproprietary ATM by cash or check
available for withdrawal not later than
the fifth business day following the
banking day on which the funds are
deposited.
(ii) Paragraph (f)(1) of this section is
effective September 1,1990, through
November 27,1992.
(2)(i) A depositary bank shall make
funds deposited in an account at a
nonproprietary ATM available for
withdrawal not later than the second
business day following the banking day
on which the funds are deposited, in the
case of—
(A) Cash;
(B) A check described in § 229.10(c)(1)
(i) through (vi); and
(C) A check described in paragraph
(b) of this section.
(ii) A depositary bank shall make
funds deposited in an account by a
check described in paragraph (c) at a
nonproprietary ATM available for
withdrawal not later than the fifth
business day following the banking day
on which the funds are deposited.
(iii) Paragraph (f)(2) of this section is
effective November 28,1992.
*
(4) A check drawn on a Federal
Reserve Bank or Federal Home Loan
Bank: a check drawn by a state or unit
of general local government: or a
cashier’s, certified, or teller’s check: if
any check referred to in this paragraph
(b)(4) is a local check that is not
governed by the availability
requirements of § 229.10(c).
(c) Nonlocal checks—(1) In general.
Except as provided in paragraphs (d),
(e), and (f) of this section, a depositary
bank shall make funds deposited in an
account by a check available for
withdrawal not later than the fifth
business day following the banking day
on which funds are deposited, in the
case of—
*
deposited in an account by one or more
checks subject to paragraphs (b), (c), or
(f) of this section are available for
withdrawal by cash or similar means.
* * * A depositary bank shall, however,
make $400 of these funds available for
withdrawal by cash or similar means
not later than 5 p.m. on the business day
on which the funds are available under
paragraphs (b), (c), or (f) of this section.
*
Appendix C to Part 229—[Amended]
3. In model clause C-10, the heading
and the first sentence under the
subheading “Deposits at Automated
Teller Machines" are revised to read as
follows:
C-IO—A utom ated Teller M achine Deposits
(Permanent Schedule, Extended Holds)
Deposits at A utom ated Teller M achines
Funds from any deposits (cash or checks)
m ade at autom ated teller m achines (ATMs)
w e do not own or operate will not be
available until the fifth business day after the
day of your deposit. * * *
Appendix E to Part 229—[Amended)
4. Appendix E is amended as set forth
below:
*
(d) Time period adjustment for
withdrawal by cash or sim ilar means. A
depositary bank may extend by one
business day the time that funds
a.
In the Com mentary to § 229,12, a new
sentence is a d ded to the end of paragraph (a),
the second paragraph of paragraph (b) is
revised, and a new paragraph (f) is added to
read a s follows:
S ection 229.72 P erm anent A vailability
S chedule
(a) E ffective date. * * * Paragraph (f)
provides special effective dates for deposits
m ade to nonproprietary ATMs.
(b) L ocal ch ecks a n d certain o th er checks.
*
*
*
*
*
In addition, the proceeds of Treasury
checks and U.S. Postal Service m oney orders
not subject to next-day (or second-day)
availability under § 229.10(c): checks draw n
on Federal Reserve Banks a n d Federal Home
Loan Banks; checks d raw n by a state or unit
of general local government; and cashier's,
certified, and teller’s checks not subject to
next-day (or second-day) availability under
§ 229.10(c) and payable in the sam e check
processing region as the depositary bank,
must be m ade available for w ithdraw al by
the second business day following deposit.
*
*
*
*
*
(fj D eposits a t nonproprietary A TMs. The
Act and regulation provide a special rule for
deposits m ade at nonproprietary ATMs.
N otwithstanding other provisions of the
regulation concerning availability
requirem ents, during the period from
Septem ber 1,1990. through Novem ber 27,
1992, a depositary ban k m ay treat all deposits
m ade by its customers at a nonproprietary
ATM as though the deposits w ere nonlocal
checks u nder the perm anent schedule. Thus
from Septem ber 1,1990, to Novem ber 27,
1992, a deposit at a nonproprietary ATM on a
Monday, including any deposit by cash or
checks that would otherw ise be subject to
next-day (or second-day) availability, must
b e m ade available for w ithdraw al not later
th an M onday of the following week.
Effective Novem ber 28,1992, deposits of
cash, “n ext-day” checks, and local checks at
a nonproprietary ATM must be m ade
available by the second business day
following the banking d ay of deposit.
Nonlocal checks deposited at a
nonproprietary ATM must continue to be
m ade available by the fifth business day
following the banking d ay of deposit. This
rule does not apply to deposits m ade at
proprietary ATMs.
b. In the Commentary to § 229.16, the first
sentence of the seventh paragraph of
paragraph (b) is revised to read as follows:
Section 229.16
D isclosure
S pecific A vai la b ility Policy
(b) * • •
A bank taking advantage of the extended
time period for making deposits at
nonproprietary ATMs available for
w ithdraw al under § 229.12(f)(1) must explain
this in the initial disclosure. * * *
*
*
*
*
*
c. In the Commentary to appendix C. under
the subheading “Model C-10,’’ the first
sentence is revised to read as follows:
Appendix C—Model Forms, Clauses, and
Notices
Federal Register / Vol. 55, No. 238 / Tuesday, December 11. 1990 / Rules and Regulations
M o d el C-10.
This clause must be incorporated in the
specific availability-policy disclosure by
b ank s that reserve the right to delay
availability of deposits at nonproprietary
ATMs until the fifth business day following
the date of deposit, as permitted by
§ 229.12(f)(1). * * '
Ey order of the Board of Governors of the
Feaeral Reserve System, D ecem ber 5,1990.
William W. Wiles,
S ee retary o f the Board.
jFR Doc. 90-28928 Filed 12-10-90; 8:45 am]
BILLING CODE 6210-01-M
50819
@FedFRASER