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FEDERAL RESERVE 8AMK
OF MEW YORK
[
10260 1
Circular No.
September 7, 1988
J
R E G U L A T IO N CC
— Final Preemption Determination for New York
Effective September 1, 1988
— Proposed Preemption Determination for Connecticut
Comment Invited by September 20, 1988
To A ll Depository Institutions, and Others Concerned,
in the Second Federal Reserve District:
The Board of Governors of the Federal Reserve System has issued a final and
a proposed interpretation concerning certain preemption determinations under its
Regulation CC, “Availability of Funds and Collection of Checks,” with respect to
the laws of New York and Connecticut. As indicated in the Board’s notices in these
matters, which have been excerpted from the Federal Register of August 24 and
appear on the following pages, a final determination has been made that the laws
of Illinois and New York have been preempted under Regulation CC, with respect
to section 4-213(5) of the Uniform Commercial Code; the Board has also issued
for comment a proposed determination that the laws of California, Connecticut,
Massachusetts, New Mexico and Rhode Island be preempted under Regulation
CC. (For the most part, only Board actions pertaining to the laws of New York
and Connecticut have been included in the Federal Register excerpt.)
Comments regarding the proposed preemption determination, should be sub
mitted by September 20, 1988 and may be sent to the Board, as indicated in the
notice, or to John F. Sobala, Vice President, Check Processing Function of this
Bank.
E.
G e r a l d C o r r ig a n ,
President.
FEDERAL RESERVE SYSTEM
12CFR Part 22§
[Docket M@. R-0640]
R®gyS@tI@n CC; A^aSiabiiSty ©f Funds
and Collection ©f Cheeks; Pre©mptS©n
Determinations
AOENCY: Board of Governors of the
Federal Reserve System.
a c t io n : Final interpretations.
SUMMARY: The Board is publishing final
official Board interpretations concerning
preemption determinations under its
Regulation CC, Availability of Funds
and Collection of Checks (12 CFR Part
229), with respect to the laws of Illinois
and New York and with respect to
section 4-213(5) of the Uniform
Commercial Code.
EFFECTIVE ©ATI: September 1,1988.
POP! FUPrrai® INFORMATION CONTACT:
Oliver Ireland, Associate General
Counsel, Legal Division (202/452-3625)
or Louise L. Roseman, Assistant
Director, Division of Federal Reserve
Bank Operations (202/452-3874); for the
hearing impaired only.
Telecommunications Device for the
Deaf, Eamestine Hill or Dorothea
Thompson (202/452-3544).
SUPPLEMENTARY INFORMATION:
Background
On May 13,1988, the Board adopted
Regulation CC to carry out the
provisions of the Expedited Funds
Availability Act (12 U.S.C. 4001-4010).
The regulation requires banks to make
funds available to their customers
within specified time frames, and to
disclose their funds availability policies
to their customers. A number of states
have also enacted rules governing funds
availability. The Act (section 608) and
Regulation CC (§ 229.20) provide that
any state law in effect on or before
September 1,1989, that provides for a
shorter hold for a category of checks
that is provided under federal law will
supersede the federal provision.
Provisions of state law governing
funds availability that provide for longer
availability than the federal law are
considered inconsistent with Regulation
CC and are preempted by Regulation
CC. In addition, state disclosure or
notice requirements concerning funds
availability related to accounts covered
by Regulation CC are preempted by the
federal disclosure scheme.
Regulation CC provides for Board
determinations of whether state law
related to the availability of funds is
preempted by federal law. These
determinations would be provided upon
the request of a state, bank, or other
interested party.
Discussion
On June 28,1988 (53 FR 24315), the
Board published, for a 30-day comment
period, proposed interpretations of
Regulation CC concerning preemption
determinations with respect to the fundi
availability laws of Illinois, Maine, and
New York (53 FR 24315). In conjunction
with the proposed determination of
Illinois law, the Board requested
comment on the relationship between
Regulation CC and section 4-213(5) of
the Uniform Commercial Code
("U.C.C.”]. The Board received twelve
comments on the proposed
interpretations, which are summarized
below. The Board is now publishing its
final interpretations concerning U.C.C.
section 4-213(5) and the Illinois and
New York preemption determinations.
The Board has deferred its
determination regarding the law of
Maine at the request of the Maine
Attorney General.
Preemption of State Schedules and
Exceptions. State law availability
schedules often differ from the
Regulation CC schedules with respect
both to the categories of checks to which
the schedules apply and the time
periods within which funds must be
available for withdrawal. State
availability schedules that provide for
availability in a shorter period of time
than required under Regulation CC
supersede the federal schedule.
In addition to the differences between
state and federal availability schedules,
a number of state laws contain
exceptions to the state availability
schedule® that are different from those
provided under the Act and Regulation
CC. Under the Board’s interpretation,
the state exceptions continue to apply
only in those cases where the state
schedule is shorter than or equal to th®
federal schedule, and then only up to the
limit permitted by the Regulation CC
schedule. Where a deposit that is
subject to a state exception under a
state schedule that is not preempted by
Regulation CC and is also subject to a
federal exception, the hold on the
deposit can be further extended by the
federal exception in accordance with
Regulation CC. For those categories of
checks for which the state schedule is
preempted by the federal schedule, only
the federal exceptions may be used. Th®
Board had initially proposed a broader
preemption scheme; however, th®
Board’s final approach responds to th©
concerns of state banking regulators that
the more protective provisions of state
law be retained. This approach also
provides a preemption standard that can
2
be more readily applied by banks in
states that have not received preemption
determinations from the Board.
Treatment of State Schedules that
Provides for the Same Availability as
the Federal Schedules. The Board
proposed to preempt any state schedule
that does not provide for shorter
availability than required under
Regulation CC. Under this approach, if
state law provides for the same
availability as federal law, the state law
would be preempted. The Maine
Attorney General’s office argued that
only inconsistent state law is preempted
by the Act and Regulation CC, and that
a state law requiring availability in the
game time periods as required by
federal law cannot be considered
Inconsistent. Some states have
incorporated the federal schedules into
their state law to facilitate state
enforcement of these requirements.
Under the Board’s final interpretations,
the only state schedules that are
preempted are those that provide for a
longer hold than required under
Regulation CC; state schedules that
provide for availability within the same
time periods would not be preempted.
Treatment of Deposits not Subject to
Regulation CC. Certain state laws
govern the availability of deposits that
are not covered by the Regulation CC
schedules. For example, the availability
schedules of several states apply to
“items” deposited to an account. The
term “item” may encompass deposits,
such as ssonnegotiable instruments, that
are not subject to the Regulation CC
availability schedules. The Board
proposed that neither the Regulation CC
nor the state schedules would apply to
deposits of items not subject to
Regulation CC’s funds availability
provisions. The Board also requested
comment on two alternative treatments
of these deposits: (1) That the state
schedules continue to apply to deposits
that are not subject to the Regulation CC
availability rules; or (2) that the
Regulation CC schedules apply to the
deposit of all “items” to “accounts”
covered by that Regulation.
Th© Maine Bureau of Banking and the
Maine Attorney General’s office
objected to the federal preemption of
deposits not regulated by federal law.
They argued that such a broad
preemptive approach needlessly
restricts the ability of a state to protect
the public from excessive holds in
circumstances where the federal
government has not acted. The Board
believe© that while funds availability
laws would be simpler if state laws
applicable to items that are not checks
were preempted, states have a
Summary of Comments
The New York Clearing House
requested confirmation that New York
banks will be able to use calculated
Four commenters (State of New York
- Banking Department New York Clearing availability for nonconsumer accounts
House, New York Credit Union League,
as provided by § 229.19(d) of Regulation
and Citicorp) responded to the proposed CC.
preemption determination for the State
of New York. All four commented on the List of Subjects ilm12 CFR Part 22®
* * *
status of checks that are payable by am
Banks, Banking, Federal Reserve
in-state bank but are nonlocal under
System,
N e w Y o r k . The New York regulation
For the reasons set out in the
contains availability schedules for local' Regulation CC. The New York State
Banking Department confirmed that the
preamble, 12 CFR Part 229 is amended
(same city) checks, in-state checks, and
intent of its proposed amendments to
as follows:
out-of-state checks, as well as certain
low-risk checks. Different schedules are the New York funds availability law is
P m i
M i0 ]
to retain state availability schedules for
provided for banks and savings
institutions. Certain portions of the New in-state nonlocal checks as the sole
1. The authority citation for Part 229
York schedule supersede the availability feature of state law to escape federal
continues to read as follows:
preemption. Two other commenters
requirements of Regulation CC. The
Authority: Title VI of Pub. L 100-88,101
New York schedules continue to apply
supported the Banking Department’s
Stat. 552, 835,12 U.S.C. 4001 et seq.
to accounts not subject to the Regulation view. The New York Clearing House
CC availability requirements. The state
supported federal preemption of all state
2. A new Appendix F is added to read
disclosure requirements are preempted
schedules, and stated that if the
as follows:
by the Regulation CC disclosure rules to proposed amendment to the state funds
Appendix F—Official Board
the extent that the state rules pertain to availability schedules were interpreted
Interpretations; Preemption
accounts subject to Regulation CC.
to supersede the federal schedules, it
Determinations
* =k *
should supersede only with respect to
nonlocal in-state checks.
U n ifo r m C o m m e r c i a l C o d e , S e c t i o n 4 U. C . C. A v a ila b ilit y o f C a s h D e p o s its
The
State
Banking
Department
also
2 13 (5 )
R e q u i r e m e n t . In conjunction with the
favored allowing the state law provision
proposed preemption determination of
Section 4-213(5) of the Uniform
providing for variation of availability
Illinois law, the Board requested
Commercial Code (“U.C.C.”) provides
schedules by agreement to stand so long that money deposited in a bank is
comment on the relation of U.C.C.
as it does not conflict with Regulation
section 4-213(5), which provides for
available for withdrawal as of right at
CC. The New York Clearing House
next-day availability of “money”
the opening of business of the banking
favored federal preemption of the New
deposited in a bank, to the Regulation
day after deposit. Although the language
York schedule.
CC requirement that deposits of cash be
“deposited in a bank” is unclear,
In addition, the New York Clearing
made available on either a next-day or
arguably it is broader than the language
House and a large bank took the
two-day basis, depending on whether
"made in person to an employee of the
position that Regulation CC’s definition
the cash was deposited at a staffed
depositary bank”, which conditions the
of
“local”
and
“nonlocal”
should
teller station. This U.C.C. provision has
next-day availability of cash under
preempt the state law’s definitions and
been adopted in each of the 50 states.
Regulation CC (§ 229.10(a)(1)). Under
The next-day availability requirement in that Regulation CC’s special cash
Regulation CC, deposits of cash that are
withdrawal rule should be available to
the Code is subject to a general
not made in person to an employee of
New York depositary banks. The New
variation by agreement provision. The
the depositary bank must be made
York
Credit
Union
League
objected
to
Board proposed that, because the ability
available by the second business day
the inclusion of payable through banks
to vary this provision of the Code by
after the banking day of deposit
in Regulation GC’s definition of "paying
agreement may allow depositary banks
(i 229.10(a)(2)). Therefore, this provision
bank”
and
therefore
did
not
favor
to provide availability to their customers
of the U.C.C. may call for the
federal preemption of New York’s
in a longer time than permitted by
availability of certain cash deposits in a
“local” and “nonlocal” definitions.
Regulation CC, this Code provision be
shorter time than provided in Regulation
The State Banking Department stated CC.
preempted by the Act and Regulation
that the Regulation CC definition of
CC. The Board also requested comment
This provision of the U.C.C., however,
“account,” should preempt the scope of
on an alternative approach, whereby
is subject to Section 4-103(1), which
transaction accounts as defined in New provides, in part, that “the effect of the
this U.C.C. provision would supersede
York law. The New York Clearing
the Regulation CC requirement, but a
provisions of this Article may b® varied
House suggested that New York banks
depositary bank could not agree to
by agreement A 6 V ’ (Th® Regulation
be allowed to follow either state or
extend availability beyond the time
CC hinds availability requirements may
federal availability schedules with
periods provided in Regulation CC.
not be varied by agreement.) U.C.C.
respect to accounts covered by state law Section 4-213(5) supersedes the
The Board has adopted this
but not by Regulation CC.
alternative approach, and has
Regulation CC provision in
determined that U.C.C. section 4-213(5)
A large bank supported federal
§ 229.10(a)(2), but a depositary bank
governing availability of cash deposits
preemption of all New York exceptions
may not agree with its customer under
to the availability schedules and
supersedes the federal requirement, but
section 4-103(1) of the Code to extend
that the ability of a bank to vary this
requested that all deposited items
availability beyond the time periods
provision by agreement under the Code
covered by state law but not by federal
provided in § 229.10(a) of Regulation CC.
is limited by the time periods provided
law be subject to the federal availability
* * *
in the federal availability schedule.
schedules.
legitimate interest in regulating deposits
of these items, and state laws should not
be preempted with respect to these
items. The Board's final interpretation
provides that deposits that are not
covered by Regulation CC continue to
be subject to the state law and are not
subject to the federal law.
* * *
3
New York
Background
The Board has been requested, in
accordance with § 229.20(d) of
Regulation CC (12 CFR Part 229), to
determine whether the Expedited Funds
Availability Act and Subpart B, and, in
connection therewith, Subpart A, of
Regulation CC, preempt the provisions
of New York law concerning the
availability of funds. This preemption
determination specifies those provisions
in the New York funds availability law
that supersede the Act and Regulation
CC. (See also the Board’s premption
determination regarding U.C.C. Section
4-213(5), pertaining to availability of
cash deposits, in paragraph (a), above.)
The New York State Banking
Department, pursuant to section 14-d of
the New York Banking Law, has issued
regulations requiring that funds
deposited in an account be made
available for withdrawal within
specified time periods, and providing
certain exceptions to those availability
schedules). .
Part 34 of the New York State Banking
Department’s General Regulations
establishes time frames within which
commercial banks, trust companies, and
branches of foreign banks ("banks”) and
savings banks, savings and loan
associations, and credit unions
("savings institutions”) must make funds
deposited in customer accounts
available for withdrawal.
Different schedules apply to deposits
in banks and savings institutions.
Deposit® must be made available for
withdrawal not later than the following
number of business days' following the
business day of deposit:
Savings
institu
tions
Banks
Local checks (same city).....
In-state checks.....................
Out-of-state checks..............
$100 or less checks; on us
checks (in-state); Treas
ury checks; NY state/
local gov/t checks.............
Nonproprietary ATMs............
3
4
7
4
5
9
2
2
+1
+1
Note: Part 34 requires that funds be availabie at
the start of the business day subsequent to the
number of days specified in the regulation. To simpli
fy comparisons of the New York and federal regula
tions, the Board has converted the time periods
used in Part 34 to th® method used in Regulation
CC; i.e. the number of business days following the
day of deposit
Coverage
The New York law and regulation
govern the availability of funds
deposited into savings and time
deposits, as well as to “accounts” as
defined in § 229.(a) of Regulation CC.
The federal preemption of state funds
availability laws only applies to
“accounts subject to Regulation CC,
which generally include transaction
accounts. Thus, to the extent that the
New York law applies to deposits in
time, savings, and other accounts (such
as accounts in which the account holder
is another bank or foreign bank) that are
not “accounts” under Regulation CC, the
state funds availability law will
continue to apply. (Note, however, that
under § 229.19(e) of Regulation CC,
Holds on other funds, the federal
availability schedules may apply to
savings, time, and other accounts not
defined as “accounts” under Regulation
CC, in certain circumstances.) The New
York State Superintendent of Banks
stated, in her comments to the Board,
that “[t]he Banking Department believes
that the Regulation CC definition of
account to the extent it applies to
transaction accounts preempts the scope
of the accounts as defined in Part 34.”
The New York law and regulation
apply to “items” deposited to accounts.
Part 34.2(e) defines “item” as “a check,
negotiable order of withdrawal or
money order deposited into an account".
The Board interprets the definition of
“item” in New York law to be consistent
with the definition of "check" in
Regulation CC (§ 229.2(k)).
Availability Schedules
The following provisions of New York
law provide for the same or a shorter
hold for certain categories of checks
than is provided under Regulation CC,
and supersede the federal availability
requirements. All other provisions of the
New York law relating to the
availability of funds deposited in
“accounts” are preempted by Regulation
CC, because they provide for longer
availability than is provided for in
Regulation CC.
Temporary Schedule. The New York
regulation requires that items payable
by a local bank or savings institution
(i.e., one that is located in the same city,
town, or village, and which uses the
same clearing facility, as the depositary
bank) be made available for withdrawal
not later than the start of business on
the third business day following deposit,
if deposited in a bank (Part 34.2(a)(1)).
The New York Superintendent of
Banking has interpreted "clearing
facility" to include both check
clearinghouse associations and Federal
Reserve check processing facilities. (Se©
December 21,1983, letter from Vincent
Tes®, New York State Superintendent of
Banks, regarding adoption of Part 34.)
Regulation CC ( | 229.11(b)) also requires
4
that the proceeds of these check
deposits be made available for
withdrawal not later than the start of
business on the third business day
following deposit. Regulation CC,
however, includes a time period
adjustment which permits a depositary
bank to delay the time it must make
funds available by cash or similar
means, for deposits of local checks
cleared outside a check clearinghouse
arrangement (§ 229.11(b)(2)). New York
law supersedes this time period
adjustment for withdrawal by cash and
similar means for local check® (as
defined by New York law) deposited in
banks and cleared through the Federal
Reserve.
The New York regulation requires
items payable by an in-state bank or
savings institution to be available for
withdrawal not later than the start of
business on the fourth business day
following deposit, if deposited in a bank
(Part 34.3(a)(2)), or the fifth business day
following deposit, if deposited in a
savings institution (Fart 34.3(b)(2)).
These time periods are shorter than the
seventh business day availability
required for nonlocal checks under
| 229.11(c) of Regulation CC, although
they are not necessarily shorter than the
schedules for nonlocal checks set forth
in | 229.11(c)(2) and Appendix B-l of
Regulation CC. Thus, these state
schedules supersede the federal
schedule to the extent that they apply to
an item payable by a New York bank or
savings institution that is defined as a
nonlocal check under Regulation CC and
the applicable state schedule is less
than the applicable schedule specified in
§ 229.11(c) and Appendix B-l.
Part 34.3 (a)(8) and (b)(8) provide that
for any item deposited at a shared or
nonproprietary electronic facility, the
depositary bank may, at its option, add
one business day to the relevant state
schedule for the item being deposited. In
the following cases, the state schedules
applicable to deposits at nonproprietary
A nris to accounts in banks supersede
the federal schedule, which provides for
seventh day availability:
Treasury checks, state and local government
checks, on us in-state checks—Third
business day
Local checks—Fourth business day
In-state checks—Fifth business day
The state schedules applicable to
deposits at nonproprietary ATMs to
accounts in savings institutions
supersede the federal schedule for the
following items:
Treasury checks, state and local government
checks, ©a m in-state cfeecko—Third
business day
Local checks—Fifth business day
In-state check©—Sixth baslaess day
Permanent Schedule. Under Part
34.3(a)(2), in-state checks must be made
available for withdrawal by the start of
business on the fourth business day
following deposit if deposited in a bank,
and the fifth business day following
deposit, if deposited in a savings
institution. The New York schedule for
banks supersedes the Regulation GC
requirement in the permanent ichedule
that nonlocal checks be made available
for withdrawal by the start of the fifth
business day following deposit, with ©
time period adjustment for withdrawals
by cash or similar means, to the extent
that the in-state checks are defined as
nonlocal under Regulation CC and the
Regulation CC schedule for nonlocal
checks is not shortened under
§ 229.12(c)(2) and Appendix R-2 of
Regulation CC. In addition, the New
York schedule for savings institutions
supersedes the Regulation CC time
period adjustment in the permanent
schedule for withdrawal by cash or
similar means, to the extent that the in
state checks are defined as nonlocal
under Regulation CC, and the Regulation
CC schedule for nonlocal checks is not
shortened under § 229.12(c)(2) and
Appendix B-2.
The following charts show the
relationship between the New York law
that supersedes Regulation CC and the
temporary and permanent availability
schedules in Regulation CC. Section
229.10 (b) and (c) of Regulation CC
preempt the New York law and thus are
not affected bv it.
T e m p o r a r y A v a il a b il ity S c h e d u l e Ne w Y or k
Savings
institu
tions
Banks
Local checks...........................
In-state nonlocal checks.......
Out-of-state nonlock checks..
Deposits at Nonproprietary
ATMs Treasury checks,
state/local gov’t checks,
on us in-state checks.........
Local checks (same
city)...............................
In-state checks...............
All other deposits............
i
33
4
347
23
5
47
4
3
3
4
5
7
6
5
7
‘ Withdrawals by cash or similar means for local
checks cleared outside the same check clearing
facility (i.e., outside a check clearinghouse or the
Federal Reserve) may be delayed in accordance
with §229.11(0).
a Withdrawals by cash or similar means for local
checks cleared outside a check clearinghouse may
be delayed in accordance with §229.11(c).
3 In order to extend the hold beyond the availabil
ity schedule, a state exception as well as a federal
exception must be applicable. In no case can the
hold be extended beyond that permitted under Reg
ulation CC.
4 Schedule i3 subject to reductions for certain
nonlocal checks. See Appendix B-1 of Regulation
P e r m a n e n t A v a il a b il ity S c h e d u l e New York
Banks
Local checks........... ... ...........
In-state nonlocal checks.......
Out-of-state nonlock checks..
Savings
institu
tions
x2
034
*2
8 8 5
»5
*5
‘ Withdrawals by cash or similar means may be
delayed in accordance with § 229.12(d).
* Schedule is subject to reductions for certain
nonlocal checks. S ee Appendix B-2 of Regulation
CC.
3 In order to extend the hold beyond the availabil
ity schedule, & state exception must be applicable.
To extend the hold beyond the applicable federal
availability schedule, a federal exception must also
be applicable. In no case can the hold be extended
beyond that permitted under Regulation CC.
Exceptions to the Availability
Schedules. New York law provides
exceptions to the state availability
schedules for large deposits, new
accounts, repeated overdrafters,
doubtful collectibility, foreign items, and
emergency conditions (Part 34.4), In all
instances where the federal availability
schedule preempts the state availability
schedule, the state exceptions do not
apply. In such cases, the depositary
bank may only invoke the federal
exceptions. For those deposits to which
the state availability schedule applies,
however, the depositary bank may
invoke a state exception and place a
hold on the deposit up to the federal
availability schedule limit for that type
of deposit. Once the federal availability
schedule limit is reached, the depositary
bank may further extend the hold under
any of the federal exceptions that apply
to that deposit. Any time a depositary
bank invokes an exception to extend a
hold beyond the time periods otherwise
permitted by the law, it must give notice
of the extended hold to its customer in
accordance with 1229.13(g) of
Regulation CC.
Variation by Agreement. Part 34.4(f)
provides that the New York regulation
does not prohibit a depositary bank
from agreeing with its customer to make
funds available for withdrawal in a
longer period of time than prescribed in
New York law because of special
circumstances, “provided that such
agreement is not contained in a
preprinted form and is not a usual,
regular business practice of the
depositary bank.” The variation by
agreement provision would remain in
effect for those provisions of New York
law that supersede Regulation CC;
however, a depositary bank could not
agree with its customer to extend
availability beyond the times permitted
under Regulation CC.
Business Day/Banking Day. New
York law requires availability within a
specified number of “business days”
5
following the "business day” of deposit.
“Business day” is defined as any day
excluding Saturdays, Sundays, and legal
holidays (Part 34.2(c)). Legal holiday is
not further defined in the regulation. The
New York definition of business day is
preempted by the Regulation CC
definitions of “business day" and
"banking day”.
Part 34.2(c) also provides that “for
electronic branches, opening and closing
times shall be the hours of the closest
manned office of the depositary bank,”
The Commentary to the Regulation CC
definition of "banking day” provides
that "deposits at an ATM are
considered made at the branch holding
the account into which the deposit is
made for purposes of determining the
day of deposit.” The Regulation CC rule
to determine what constitutes a banking
day for ATM deposits preempts the New
York provision.
Disclosures
Part 34.5 of New York law requires
depositary banks to disclose their funds
availability policy to their customers,
and to post their availability schedule in
each branch location. The purposes of
the disclosures concerning funds
availability appear to be met by the
disclosure requirements in Regulation
CC. Regulation CC preempts state
disclosure requirements concerning
funds availability that relate to
"accounts”. Thus, Part 34.5 of New York
law is preempted by Regulation CC, to
the extend that it applies to “accounts”,
as defined by Regulation CC. The New
York disclosure rales would continue to
apply to savings, time, and other
accounts not governed by Regulation CC
disclosure requirements.
By order of the Board of Governors of the
Federal Reserve System, August 18,1988.
William W. Wiles,
S e c r e ta r y o f th e B o a rd .
[FR Doc. 88-19140 Filed 8-23-88; 8:45 am]
BILLING GOSS 021©=®1=C3
FEDERAL RESERVE SYSTEM
12 Cm Part 229
ID@ek©S No. R-SS44]
Regulation CC; Availability of Funds
and Collection of Checks; Preemption
Determinations
agency: Board of Governors of the
Federal Reserve System.
a c t i o n : Proposed interpretations.
The Board is publishing for
comment proposed official Board
interpretations concerning preemption
determinations under its Regulation CC,
su m m a r y :
Availability of Funds and Collection cf
Checks (12 CFR Part 229), with respect
to the laws of California, Connecticut,
Massachusetts, New Mexico, and Rhode
Island.
DATES: Comments must be submitted on
or before September 20,1980.
ADDRESSES: Comments, which should
refer to Docket No. R-0S44, 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 5:15 p.m.
All comments received at the above
address will be made available to the
public, and may be inspected at the
Freedom of Information Office, Room B1122 between 8:45 a.m. and 5:00 p.m.
RJPrraEK INFORMATION CONTACT:
Oliver Ireland, Associate General
Counsel, Legal Division (202/452-3625)
or Louise L. Roseman^Assistant
Director, Division of Federal Reserve
Bank Operations (202/452-3874); for the
hearing impaired only:
Telecommunications Device for the
Deaf, Eamestine Hill or Dorothea
Thompson (202/452-3544).
SUPPLEMENTARY KSFORMATIOft:
Background
On May 13,1980, the Board adopted
Regulation CC to carry out the
provisions of the Expedited Funds
Availability Act (12 U.S.C. 4001-4010).
The regulation requires banks to make
funds available to their customers
within specified time frames and to
disclose their funds availability policies
to their customers. A number of states
have also enacted rules governing funds
availability. The Act (section 608) and
Regulation CC (§ 229.20) provide that
any provision of state law in effect on or
before September 1,1989, that provides
for a shorter hold for a category of
checks than is provided under federal
law will supersede the federal provision.
Provisions of state law governing
funds availability that do not supersede
federal law are considered inconsistent,
and are thus preempted by Regulation
CC. Thus, a state law that permits a
bank to make funds available for
withdrawal in a longer period than
permitted under Regulation CC is
preempted by that regulation. In
addition, state disclosure or notice
requirements concerning funds
availability related to accounts covered
by Regulation CC are preempted by the
federal disclosure scheme.
Regulation CC provides for Board
determinations as to whether state law
related to the availability of funds is
facilitate bank compliance with a single
preempted by federal law. These
standard while retaining state
determinations would be provided upon
enforcement of these requirements.
the request of a state, bank, or other
Under the Board’s interpretations; the
interested party.
only state schedules that are preempted
are those that provide for a longer hold <
Discussion
than required under Regulation CC;
The Board is publishing, for a 30-day
state schedules that provide for
comment period, its interpretations of
availability within the same time
Regulation CC concerning preemption
periods would not be preempted.
determinations with respect to the laws
Treatment o f Deposits not Subject to
of California, Connecticut,
Regulation CC. Certain state laws
Massachusetts, New Mexico, and Rhode govern the availability of deposits that
Island.
are not covered by the Regulation CC
Preemption o f State Schedules and
schedules. For example, the availability
Exceptions. State law availability
schedules of several states apply to
schedules often differ from the
"items” deposited to an account. The
Regulation CC schedules with respect
term “item” may encompass deposits,
both to the categories of checks to which such as nonnegotiable instruments, that
the schedules apply and the time
are not subject to the Regulation CC
periods within which funds must be
availability schedules. The Board
available for withdrawal. State
believes that while funds availability
availability schedules which provide for laws would be simpler if state laws
availability in a shorter period of time
applicable to items that are not checks
than required under Regulation CC
were preempted, states have a
supersede the federal schedule.
legitimate interest in regulating deposits
In addition to the differences between of these items, and state laws should not
state and federal availability schedules,
be preempted with respect to these
a number of state laws contain
items. The Board’s proposed
exceptions to the state availability
interpretations provide that deposits not
schedules that are different from those
covered by Regulation CG continue to
provided under the Act and Regulation
be subject to the state law.
CC. Under the Board’s proposed
Connecticut. Connecticut law
interpretations, the state exceptions
provides availability schedules for
continue to apply only in those cases
deposits of on us checks, in-state
where the state schedule is shorter than
checks, and out-of-state checks. The
or equal to the federal schedule, and
state law also provides certain
then only up to the limit permitted by
exceptions to those schedules.
the Regulation CC schedule. Where a
Generally, the state schedules and
deposit that is subject to a state
exceptions allow longer hold periods
exception under a state schedule that is
than the federal schedules and
not preempted by Regulation CC and is
Regulation
CC will preempt; however,
also subject to a federal exception, the
out-of-state
nonlocal checks will
hold on the deposit can be further
continue to be governed by the shorter
extended under the federal exception in
state schedule. The state schedules will
accordance with Regulation CC. For
also continue to apply to items such as
those categories of checks for which the
nonnegotiable instruments that are not
state schedule is preempted by the
covered by Regulation CC. In addition,
federal schedule, only the federal
the Connecticut law, including
exceptions may be used. This approach
provides a preemption standard that can disclosure requirements, will continue to
apply to accounts, such as savings and
be more readily applied by banks in
time accounts, not subject to Regulation
states that have not received preemption CC.
* * *
determinations from the Board.
List of Subjects in 12 CFR Part 229
Treatment of State Schedules that
Provide for the Same Availability as the
Banks, Banking, Federal Reserve
Federal Schedules. According to the
System.
provisions of the Act, only inconsistent
For the reasons set out in its®
state law is preempted by the Act and
preamble, 12 CFR Part 229 is proposed
Regulation CC. The Board has
to be amended as follows:
determined that a state law requiring
PAK? 229—[AMENDED]
availability in the same time periods as
required by federal law is not
1.
The authority citation for Part 229
inconsistent with Regulation CC. Some
continues to read as follows:
states have incorporated the federal
Authority: Title VI of Pub. L 100-86,101
schedules into their state law to
Stat 552, 635,12 U.S.C. 4001 et seq.
6
2.
Appendix F is amended by adding
preemption determinations for the states
of California, Connecticut,
Massachusetts, New Mexico, and Rhode
Island alphabetically to read as follows:
Appendix F“ 43fSckl Board
Interpretations
* * *
Connecticut
Background
The Board has been requested, in
accordance watfa § 23.20(d) of Regulation GC
(12 CFR Part 229), to determine whether the
Expedited Funds Availability Act and
Subpart B, and, in connection therewith,
Subpart A of Regulation CC, preempt
provisions of Connecticut law relating to the
availability of funds. This preemption
determination specifies those provisions of
the Connecticut funds availability law that
supersede the Act and Regulation CC. (See
also the Board’s preemption determination
regarding the Uniform Commercial Code,
section 4-213(5), pertaining to availability of
cash deposits.)
In 1987, Connecticut amended its statute
governing funds availability (Conn. Gen. Stat.
section 38-Sv), which requires Connecticut
depository institutions to make funds
deposited in a checking, time, interest, or
savings account available for withdrawal
within specified periods.
Generally, the Connecticut statute provides
that items deposited in a checking, time,
interest, or savings account at a depository
institution must be available for withdrawal
on the second business day after deposit if
payable by the depositary bank; the fourth
business day after deposit if payable by a
Connecticut depository institution: and the
sixth business day after deposit if payable by
a depository institution not located in
Connecticut. Exceptions to the schedules are
provided for items received for deposit for
the purpose of opening an account and for
items that the depositary bank has reason to
believe will not clear. The longer hold period
for items subject to an exception is
undefined. The Connecticut statute also
requires availability policy disclosures to
depositors in the form of written notices and
notices posted conspicuously at each branch.
Coverage
The Connecticut statute governs the
availability of funds deposited in savings and
time accounts, as well as “accounts” as
defined in § 229.2(a) of Regulation CC. The
federal preemption of state funds availability
requirements only applies to “accounts”
subject to Regulation CC, which generally
consist of transaction accounts. Thus, the
Connecticut availability schedules,
exceptions, and disclosure requirements
continue to apply to deposits in time and
savings accounts that are not "accounts!”
under Regulation CC. (Not®, however, that
under § 229.19(e) or Regulation CC, Holds ou
other funds, the federal availability schedules
may apply to savings, time, and other
accounts not defined as “accounts” undos?
Regulation CC, in certain circumstances.) The
Connecticut statute would also continue to
apply to transaction accounts subject to the
state law, but not covered by Regulation CC,
such as those where the account holder is
another bank.
The Connecticut statute applies to “items”
deposited to accounts. This term
encompasses instruments that are not
defined as “checks” in Regulation CC
( | 22©.2{k)), such as nonnegotiable
instruments, and are therefor® not subject to
Regulation C C s provisions governing funds
availability. Those items that are subject to
Connecticut law but are not subject to
Regulation CC will c o n fe s s to be covered fey
the state availability schedules and
exceptions. Certain other items, which are
"checks” under Regulation CC but are not
covered by the Connecticut law, such as
payable through drafts payable by a
nondepository institution, would be-subject
to the provisions of Regulation CC.
Availability Schedules
Temporary Schedule. Connecticut law
provides that certain checks that are nonlocal
under Regulation QC must be available in a
shorter time (sixth business day after deposit
for checks payable by depository institutions
not located in Connecticut) than under the
federal regulation (seventh business day after
deposit under the temporary schedule for
nonlocal checks). Accordingly, the
Connecticut law preempts Regulation CC
with respect to nonlocal checks (other than
checks covered by Appendix B -l) deposited
in “accounts” until the federal permanent
availability schedules take effect on
September 1 ,198a
The CoanesMciat statute does not specify
whether it applies to deposits of checks ©t
nonproprietary ATMs. Under the temporary
schedule in Regulation CC, deposits at
nonproprietary ATMs must be made
available for withdrawal at the opening of
the seventh business day after deposit To the
7
extent that the Connecticut schedules provide
for shorter availability for deposits at
nonproprietary ATMs, they would supersede
the temporary schedule in Regulation CC for
deposits at nonproprietary ATMs specified in
§ 229.11(d).
Exceptions to the Availability Schedule.
The Connecticut law provides exceptions for
items received for deposit for the purpose of
opening new accounts and for items that the
depositary bank has reason to believe will
not clear. In all cases where the federal
availability schedule preempts the state
schedule, only the federal exceptions will
apply. For deposits that are covered by the
state availability schedule (i.e., nonlocal outof-state checks under the temporary
schedule), the state exemptions may be used
to extend the state availability schedule (of
six business days) to meet the Federal
availability schedule (of seven business days
under the temporary schedule). Once the
deposit is held up to the federal availability
schedule limit under a state exception, the
depositary bank may further extend the hold
under any federal exception that can be
applied to the deposit. Any time a depositary
bank invokes an exception to extend a hold
beyond the time periods otherwise permitted
by law. it must give notice of the extended
hold to its customer, in accordance with
§ 229.13(g) of Regulation CC.
Disclosures
The Connecticut statute (Conn. Gen. S ta i
section 36-9d(b)) requires written notice to
depositors of an institution’s check hold
limitation policies and requires a notice to be
posted in each branch. The purposes of tbs
disclosures concerning funds availability
appear to be met by the disclosure
requirements m Regulation CC.
R egulation CC preem pts sta te d isclosu re
requirem ents concerning fun ds availab ility
that relate to “a cco u n ts” ( | 229.20(c)(2)).
Thus, the Connecticut statute is preempted by
Regulation CC to the extent that these
disclosure provisions apply to “accounts” as
defined by Regulation CC. The Connecticut
disclosure rales tveuld continue to-applyte
accounts, such as savings and time accounts,
not governed by the Regulation CC disclosure
requirements,
* * *
By order of the Board o f G overnors o f the
F ed eral R eserve System , A u gust 18,1988.
W illiam W . W iles,
Secretary o f the Board.
[FR D oc. 88-19147 Filed 8-23-88: 8:45 am)
05LUK© CODE 6§H©*®1-£3
FEDERAL RESERVE BANK
OF NEW YORK
September 29, 1988
REGULATION CC
Payable Through Routing Numbers
To A ll Depository Institutions
in the Second Federal Reserve District:
As indicated in our Circular No. 10256, dated August 23, 1988, the U.S. District Court for
the District of Columbia ruled that the definition of paying bank in Regulation CC was inconsistent
with the Expedited Funds Availability Act and invalid to the extent that it defined a credit union
share draft payable through a bank as local or nonlocal depending on the location of the payable
through bank rather than the payor credit union for purposes of the availability requirements in Reg
ulation CC. The Board accordingly adopted an interim amendment to the regulation, conforming
the definition to the court decision.
In an effort to assist depository institutions in identifying payable through share drafts and other
checks written on banks that are payable through other banks in order to comply with the interim
rule amending Regulation CC, the staff of the Board of Governors has compiled a list of payable
through banks and corresponding payable through routing numbers; the list is printed on the fol
lowing pages.
Please note that the list may not be complete or totally accurate.
As additional information is received, the list will be updated. Questions regarding this matter
should be addressed to your local Federal Reserve office, as indicated below:
Cranford Office
Fred A. Denesevich (201) 272-9000;
Reginald J. Skowronski (201) 272-9000
Utica Office
Angus J. Kennedy (315) 768-2220;
William M. Kirk (315) 768-2250
New York Head Office
Matthew J. Puglisi (212) 720-6551;
Patricia Cabello (212) 720-7780
Buffalo Branch
David P. Schwarzmueller (716) 849-5018;
W. Raymond Gatgens (716) 849-5051
Jericho Office
Anthony N. Sagliano (516) 997-4569;
Mary Anne Banevicius (516) 997-4905
John F. Sobala,
Vice President.
Routing Members Used for Payable Through Drafts*
(By Federal Reserve District)
First District
Union Trust B a n k ...........................................................................................................
Connecticut National B a n k ............................................................................................
Key B a n k ..........................................................................................................................
Casco B a n k .............................................................
0211-0110-8
0119-0044-5
0112-0060-8
0112-0002-2
Second District
Chase Manhattan Bank, N .A .......................
Empire Corporate E C U ..................................................................................................
Chase Lincoln B a n k ......................................................................................................
0219-0947-8
2213-8171-5
0223-0017-3
Third District
First Pennsylvania B a n k ................................................................................................
0310-0002-4
Fourth District
National City B a n k ...................................................................................................... .
Central Trust C om pany..................................................................................................
Pittsburgh National B a n k ..............................................................................................
0410-0012-4
0420-0039-8
0430-0009-6
Fifth District
Sovran B a n k ....................................................................................................................
Crestar B a n k ....................................................................................................................
Signet B a n k ......................................................................................................................
Dominion B a n k ...............................................................................................................
First National Bank of M aryland.................................................................................
0510-0001-7
0510-0002-0
0510-0677-8
0514-0054-9
0520-0011-3
Sixth District
First American Bank of A tlan ta...................................................................................
Central Bank of the S o u t h ............................................................................................
Sun B a n k ..........................................................................................................................
Florida National B a n k ....................................................................................................
City National B a n k .........................................................................................................
0610-0025-6
0620-0118-6
0660-0060-4
0632-0036-8
0660-0436-7
Seventh District
Merchant National Bank & Trust (IN )........................................................................
Chemical Bank ( M I ) ......................................................................................................
Michigan National B a n k ................................................................................................
Credit Union Central ( M I ) .......................................................................................
NBD Detroit (Pontiac B ranch)..................................................................................
Cleveland State Bank (W I)............................................................................................
First National Bank of Kenosha ( W I ) ........................................................................
First National Bank of Menesha ( W I ) ........................................................................
First Interstate Bank of Appleton ( W I ) ......................................................................
Iowa Corporate Central C U .........................................................................................
0740-0006-5
0724-1001-3
0720-0080-5
2724-7807-5
0720-0032-6
0759-0485-6
0759-0065-6
0759-0164-2
0759-0087-6
2730-8267-7
Eighth District
Centere Bank, Rolla (M O )............................................................................................
Pulaski Bank & Trust ( A R ) ..........................................................................................
Liberty National Bank (K Y )..........................................................................................
0815-0289-9
0820-0779-1
0830-0013-7
* This list contains routing numbers of which the Federal Reserve is aware that are used for payable through drafts that are payable
by credit unions and other depository institutions.
\
2
Ninth District
First Bank St. Cloud (M N )............................................................................................
First American National Bank (M N )..........................................................................
Security State Bank (MN) ............................................................................................
Norwest Bank (St. Paul B ra n c h ).................................................................................
Western Bank (S D ).........................................................................................................
Community National Bank (M N ).................................................................................
0919-0532-1
0919-0028-7
0919-1238-5
0960-0010-8
0914-0934-8
0919-0148-0
Tenth District
U.S. Central Corporate CU ..........................................................................................
Kansas Corporate C U ....................................................................................................
Missouri Corporate C U ..................................................................................................
Colorado Corporate CU ................................................................................................
First National Bank of H enryetta.................................................................................
Security Bank of M ia m i................................................................................................
Western National B a n k ..................................................................................................
3011-8962-0
3011-8011-1
2810-8558-5
3070-8739-9
1031-0115-2
1031-1090-7
1039-0201-8
Eleventh District
Town North National Bank .........................................................................................
1119-0450-3
Twelfth District
Security P a c ific ...............................................................................................................
Nevada National Bank ...................................................................................................
Wells Fargo B a n k ...........................................................................................................
Federal Home Loan B a n k ..............................................................................................
Union B a n k ...................................................................................
1220-0077-1 and
W escorp............................................................................................................................
Pacific First F S B .............................................................................................................
Ben Franklin S & L ...........................................................................................................
Evergreen B a n k ...............................................................................................................
League Central Credit Union, R eno ............................................................................
First Nationwide S a v in g s ..............................................................................................
Bank of H a w a ii...............................................................................................................
First Security Bank (UT) ..............................................................................................
Idaho Corporate Credit U n io n .....................................................................................
First Interstate Bank of C alifo rn ia...............................................................................
3
1220-0004-3
1212- 0015-8
1210- 0024-8
1211- 3994-4
1210-0097-6
3222-8086-7
3250-7155-2
3230-7038-0
1250-0639-0
3212-8140-1
3210-7000-7
1213- 0102-8
1240-0001-2
3241-8398-8
1220 0021-8
-
@FedFRASER