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FEDERAL RESERVE BANK OF NEW YORK Circular No. 1970, effective September 1, 1939. Superseding Circular No. 1005 as amended COLLECTION OF CASH ITEMS To the Member and Nonmember Clearing Banks of the Second Federal Reserve District: Eegulation J of the Board of Governors of the Federal Reserve System and this circular and our time schedules prescribe the terms and conditions upon which we will receive and handle cash items for collection. Section 6 of Regulation J of the Board of Governors of the Federal Reserve System provides that each Federal Reserve bank may promulgate rules not inconsistent with the terms of the law and Regulation J, governing the details of its check clearing and collection operations, and that such rules shall be binding upon any member or nonmember clearing bank which sends any check to such Federal Reserve bank for collection or to any other Federal Reserve bank for the account of such Federal Reserve bank for collection. This circular and our time schedules are issued pursuant to this provision of Regulation J. SECTION 1. ITEMS WHICH WILL BE ACCEPTED AS CASH ITEMS The following will be accepted for collection as cash items: (1) Checks drawn on banks or banking institutions (including private bankers) located in any Federal Reserve district which are collectible at par in funds acceptable to the collecting Federal Reserve bank. A list of "Banks upon which items will be received by Federal Reserve banks for collection and credit" is furnished semiannually and a supplement is furnished each month showing changes subsequent to the last complete list. This list is subject to change without notice and the right is reserved to return without presentation any items drawn on banks which may have withdrawn or may have been removed from the list or may have been reported closed. (2) Government checks and warrants drawn on the Treasurer of the United States. (3) Such other items, collectible at par in funds acceptable to the Federal Reserve bank of the district in which such items are payable, as we may be willing to accept as cash items. When any such item is accepted as a cash item, we will give credit therefor in accordance with the provisions of this circular and our time schedules; but with respect to such item the "Terms of collection" set forth in our current circular relating to the collection of noncash items will apply. Items which have been previously presented and dishonored or protested; items with passbook, certificate, or any other document attached; and items with special instructions or requiring special handling should be sent to us as noncash collection items, subject to the terms of our current circular relating to the collection of noncash items. Checks drawn on or payable at a nonmember bank which is not included in the currently effective list of '' Banks upon which items will be received by Federal Reserve banks for collection and credit'', referred to above, will not be received either as cash items or as noncash items by us or by any other Federal Reserve bank. In the interests of good banking, the indirect routing of cash items is discouraged, and member banks and nonmember clearing banks should not send to us or to other Federal Reserve banks for our account, any items payable in other Federal Reserve districts, which bear the endorsements of banks located in other Federal Reserve districts, in cases where it is evident that such items have been routed indirectly. SECTION 2. TERMS AND CONDITIONS OF COLLECTION Every bank sending cash items to us or to another Federal Reserve bank direct for our account, by such act will be understood to have agreed to the terms and conditions of this circular, of our time schedules, and of Regulation J of the Board of Governors of the Federal Reserve System in effect at the time such cash items are received by the Federal Reserve bank. Cash items payable in other Federal Reserve districts and forwarded for collection to the Federal Reserve banks of such other districts either by us or by our member and nonmember clearing banks for our account will be handled by such other Federal Reserve banks subject to the terms and conditions of Regulation J and of the respective circulars and time schedules of such other Federal Reserve banks, and to the rules of law applicable to such banks; but we will give credit to the sending banks for such items in accordance with our time schedules. Any cash item, or check received in remittance therefor, may be presented through a clearing house or a clearing house association subject to the rules and practices thereof. Any cash item, or check received in remittance therefor, may be presented by delivery to a bank or representative thereof, pursuant to an agreement or arrangement permitting such bank at any time during the same day to pay or remit for such cash item or check or to return it as dishonored and entitling such bank, if it has previously made conditional payment or remittance for the cash item or check so returned, to receive credit or refund therefor. The specific authorization of the above methods of presentment shall not be deemed or construed to exclude any other method of forwarding or presentment which may be authorized or would constitute ordinary care under existing rules of law or under any other provision of Regulation J or of this circular or of our time schedules. Regulation J of the Board of Governors of the Federal Reserve System on the date of this circular prescribes the following terms and conditions under which all Federal Reserve banks will handle checks as cash items for member and nonmember clearing banks: "The Board of Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and nonmember clearing bank which sends checks to any Federal Reserve bank for deposit or collection shall by such action be deemed (a) to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; (b) to warrant its own authority to give the Federal Reserve banks such authority; (c) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys' fees and expenses of litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank's guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such checks; and (d) to guarantee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement of the sending bank. "(1) A Federal Reserve bank will act only as agent of the bank from which it receives such checks and will assume no liability except for its own negligence and its guaranty of prior endorsements. "(2) A Federal Reserve bank may present such checks for payment or send such checks for collection direct to the bank on which they are drawn or at which they are payable, or in its discretion may forward them to another agent with authority to present them for payment or send them for collection direct to the bank on which they are drawn or at which they are payable. "(3) A Federal Reserve bank may, in its discretion and at its option, either directly or through or from an agent, accept in payment of or in remittance for such checks, cash, bank drafts, transfers of funds or bank credits, or other forms of payment or remittance, acceptable to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure of the drawee bank or any agent to pay or remit for such, checks, nor for any loss resulting from the acceptance from the drawee bank or any collecting agent, in lieu of cash, of any other form of payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium of payment or remittance which may be accepted from the drawee bank or any collecting agent. "(4) Checks received by a Federal Reserve bank which are payable in its own district will ordinarily be forwarded or presented direct to the banks on which they are drawn, and such banks will be required to remit or pay therefor at par in such one or more of the forms of payment or remittance authorized under paragraph (3) hereof as may be acceptable to the Federal Reserve bank. "(5) Checks received by a Federal Reserve bank payable in other districts will ordinarily be forwarded for collection to the Federal Reserve bank of the district in which such checks are payable; provided, however, that, where arrangements can be made satisfactory to the collecting bank or agent and to the Federal Reserve bank of the district in which such checks are payable, any such checks may be forwarded for collection direct to the bank on which they are drawn or at which they are payable, or may be forwarded for collection to another agent with authority to present them for payment direct to the bank on which they are drawn or at which they are payable. All such checks shall be handled subject to all the terms and conditions of this regulation. "(6) With respect to any check sent direct by a member or nonmember clearing bank in one district to a Federal Reserve bank in another district, the relationships and the rights and liabilities existing between the member or nonmember clearing bank, the Federal Reserve bank of its district and the Federal Reserve bank to which the check is sent will be the same, and the relevant provisions of this regulation will apply, as though the member or nonmember clearing bank had sent such check to the Federal Reserve bank of its district with its endorsement and guaranty of prior endorsements and such Federal Reserve bank had sent the check to the other Federal Reserve bank with its endorsement and guaranty of prior endorsements. "(7) Bank drafts received by a Federal Reserve bank in payment of or in remittance for checks handled under the terms of this regulation shall likewise be handled for collection subject to all the terms and conditions of this regulation. "(8) The amount of any check for which payment in actually and finally collected funds is not received shall be charged back to the forwarding bank, regardless of whether or not the check itself can be returned. In such event, neither the owner or holder of any such check, nor the bank which sent such check to the Federal Reserve bank for collection shall have any right of recourse upon, interest in, or right of payment from, any reserve balance, clearing account, deposit account, or other funds of the drawee bank or of any bank to which such checks have been sent for collection, in the possession of the Federal Reserve bank. No draft, authorization to charge, or other order, upon any reserve balance, clearing account, deposit account, or other funds of a paying, remitting, or collecting bank in the possession of a Federal Reserve bank, issued for the purpose of settling items handled under the terms of this regulation will be paid, acted upon, or honored after receipt by such Federal Reserve bank of notice of suspension or closing of such paying, remitting, or collecting bank." SECTION 3. SPECIAL PROVISIONS REGARDING GOVERNMENT CHECKS AND WARRANTS The provisions of Regulation J and of this circular and of our time schedules shall be deemed applicable to the handling of and credit and availability for United States Government checks and warrants (including Government checks and warrants which we receive in clearing house exchanges) in so far as such provisions relate to checks generally or to Government checks and warrants in particular. Credit for Government checks and warrants will in all cases be subject to payment by the Treasurer of the United States and they will be handled in accordance with, and subject to, the provisions of Treasury Department circular No. 176, in effect at the time such items are received by the Federal Reserve bank. The following is quoted from paragraph 34 of Treasury Department circular No. 176, in effect at the date of this circular: "34. Payment by Treasurer. — The Treasurer of the United States reserves the usual right of the drawee to examine, when received, all Government checks and warrants cashed by Federal Reserve banks and branches and member bank depositaries, and to refuse payment thereon. The Treasurer will handle all such items received by him on the following basis: "(1) Immediate return will be made of any check or warrant, payment of which is refused on account of forged signature of drawer, insufficient funds, stoppage of payment, or any material defect discovered upon first examination, in all of which cases the transit account of the remitting bank will be charged with the amount of the returned check or warrant and the remitting bank will be expected to give immediate credit therefor in the Treasurer's account; but if the original check or warrant is required for use in connection with a criminal investigation or legal proceeding, the original will be retained for that purpose and a photographic copy of the face and back will be forwarded to the remitting bank in lieu of the original. "(2) In the event that any check or warrant which has been paid by the Treasurer is subsequently found to bear a forged indorsement, or to bear any other material alteration or defect which was not discovered upon first examination, a photographic copy of the check or warrant will be forwarded to the remitting bank and its transit account will be charged with the amount by the Treasurer. The remitting bank, if a member bank depositary, will be expected to give immediate credit therefor in the Treasurer's account; if a Federal Reserve bank or branch, it will be expected to demand restitution at once from its prior indorser or indorsers, to maintain a close follow-up on its demand, and to give credit in the Treasurer's account when reimbursement has been made. In the case of checks paid more than a year before reclamation is requested of the presenting bank, the Treasurer may, in his discretion, treat the item as a collection instead of charging the presenting bank's account, with the understanding that no rights of the Government as to ultimate recovery are waived thereby. "(3) In cases of checks or warrants raised or bearing a forged signature of the drawer, not discovered upon first examination by the Treasurer, and in other cases where the Treasurer's right to reclaim is in question, the checks or warrants will be forwarded to the remitting bank as collection items and taken up by the Treasurer when credited, with no intermediate charge in the account of the remitting bank. A photographic copy may be returned in lieu of the original if the latter is required for use in connection with a criminal investigation or legal proceeding." SECTION 4. PREPARATION OF CASH LETTERS BY SENDING BANKS Instructions relative to sorting and description of items are set forth in our time schedules. Each bank sending cash items to a Federal Reserve bank will be understood to have agreed to indemnify the Reserve bank to which the items are sent, and in the case of items sent direct to the Reserve bank of another district also to have agreed to indemnify the Reserve bank in the district in which the sending bank is located, against any loss or expense resulting from delay in advising nonpayment of any item where such delay is due, in whole or in part, to the lack of description, or to the erroneous, incomplete, or defective description of the item by the sending bank. SECTION 5. ENDORSEMENTS All cash items sent to us, or to another Federal Reserve bank direct for our account, should be endorsed without restriction to the order of the Federal Reserve bank to which sent, or to the order of any bank, banker or trust company, or with some similar endorsement. Cash items will be accepted by us, and by other Federal Reserve banks, only upon the understanding and condition that all prior endorsements are guaranteed by the sending bank. There should be incorporated in the endorsement of the sending bank the phrase "All prior endorsements guaranteed". The act of sending or delivering a cash item to us or to another Federal Reserve bank will, however, be deemed and understood to constitute a guaranty of all prior endorsements on such items, whether or not an express guaranty is incorporated in the sending bank's endorsement. The endorsement of the sending bank should be dated and should show the American Bankers Association transit number of the sending bank in prominent type on both sides. SECTION 6. UNIFORM INSTRUCTIONS Federal Reserve banks will receive, handle and forward cash items subject to the following uniform instructions regarding protest and advice of nonpayment: (1) DO NOT PROTEST items of $10.00 or less. (2) PROTEST dishonored items of $10.01 or over, except those bearing on their face the A. B. A. no protest symbol of the Federal Reserve bank or of a preceding bank endorser. (3) WIRE ADVICE of nonpayment of all items of $500.00 or over. All Federal Reserve banks will receive, handle and forward cash items only in accordance with these uniform instructions, and any contrary or special instructions noted on cash letters or otherwise transmitted with cash items will be disregarded. If a bank should desire to have any cash item handled by us or by any other Federal Reserve bank under any instructions differing from the uniform instructions given above, it will be necessary for such bank to forward such item as an individual noncash item, with the instructions noted in the letter of transmittal, for collection and credit when paid, in accordance with the terms of our current circular relating to the collection of noncash items. SECTION 7. TELEGRAPHIC COSTS The cost of all telegrams pertaining to payment or nonpayment of items, or in connection with receiving or transmitting any other information or instructions, will be charged to the accounts of the banks from which such items were received; and all such telegrams to such banks will be sent "collect". Charges for telegrams relating to cash items forwarded over leased wires of the Federal Reserve System will be made against banks and will be based on commercial telegraph rates. SECTION 8. TIME SCHEDULES AND AVAILABILITY OF CREDITS We publish and furnish to member and nonmember clearing banks time schedules showing when cash items will become available for reserve and withdrawal or other use by the sending banks after receipt by us at our head office or branch. For all items received as cash items the sending bank will be given immediate credit or deferred credit, in accordance with such time schedules and as provided in Regulation J. Credit for letters containing items unassorted as to availability may be deferred for the longest period of availability prescribed by the current time schedules of this bank with respect to any item enclosed, not to exceed three business days. Time schedules do not in many instances show the actual time required for collection, and advices received from us showing the availability of items cannot be considered as advices of actual payment on the dates of availability. Credit will in all instances be subject to receipt of payment by us in actually and finally collected funds. Immediate Credit For all such cash items as are accepted for immediate credit in accordance with our current time schedules, immediate credit will be given upon our books at full face value in the reserve account or clearing account upon the day of receipt, and the proceeds Mali at once be counted as reserve (in the case of a member bank) and become available for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which we have not yet received payment in actually and finally collected funds. Deferred Credit For all such cash items as are accepted for deferred credit in accordance with our current time schedules, deferred credit will be entered upon our books at full face value, but the proceeds will not be counted as reserve nor become available for withdrawal or other use by the sending bank until the expiration of the time specified in our time schedules, at which time credit will be transferred from the deferred account to the reserve account or clearing account and will then be counted as reserve (in the case of a member bank) and become available for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which we have not yet received payment in actually and finally collected funds. SECTION 9. DIRECT SENDING OF CASH ITEMS TO OTHER FEDERAL RESERVE BANKS Member and nonmember clearing banks having a substantial volume of cash items payable in other Federal Reserve districts which they wish to collect through the Federal Reserve banks, are urged to apply to us for permission to send such items direct to the Federal Reserve banks and branches of the districts in which such items are payable for collection and credit to us. Appropriate instructions will be sent to the banks to which such permission is granted. When in our judgment a member or nonmember clearing bank has a sufficient volume of cash items payable in other Federal Reserve districts to justify direct routing, we reserve the right to decline to accept such items for collection unless they are routed direct to the Federal Reserve banks and branches of such other Federal Reserve districts. Nothing contained in Regulation J or in this circular or in our time schedules shall be deemed or construed to limit or restrict our authority, or to add to our duty or responsibility, as agent for collection under existing rules of law. With respect to any point not provided for in Regulation J, or in this circular, or in our time schedules, as they or any of them may, from time to time, be modified, amended, or added to, the existing rules of law in the State of New York shall apply. The right is reserved to withdraw, add to, or amend at any time, any of the provisions of this circular and the time schedules. GEORGE L. HARRISON, President. BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM CHECK CLEARING AND COLLECTION REGULATION J This Regulation as printed herewith is in the form as amended effective September 1, 1939 INQUIRIES REGARDING THIS REGULATION Any inquiry relating to this regulation should be addressed to the Federal Reserve bank of the district in which the inquiry arises. REGULATION J As amended, effective September 1, 1939 (Superseding Regulation J, Series of 1930) CHECK CLEARING AND COLLECTION SECTION 1. STATUTORY PROVISIONS Section 16 of the Federal Reserve Act authorizes the Board of Governors of the Federal Reserve System to require each Federal Reserve bank to exercise the functions of a clearing house for its member banks, and section 13 of the Federal Reserve Act, as amended by the Act approved June 21, 1917, authorizes each Federal Reserve bank to receive from any nonmember bank or trust company, solely for the purposes of exchange or of collection, 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 its Federal Reserve bank a balance sufficient to offset the items in transit held for its account by the Federal Reserve bank. SECTION 2. GENERAL REQUIREMENTS In pursuance of the authority vested in it under these provisions of law, the Board of Governors of the Federal Reserve System, desiring to afford both to the public and to the various banks of the country a direct, expeditious, and economical system of check collection and settlement of balances, has arranged to have each Federal Reserve bank exercise the functions of a clearing house and collect checks for such of its member banks as desire to avail themselves of its privileges and for such nonmember State banks and trust companies as may maintain with the Federal Reserve bank balances sufficient to qualify them under the provisions of section 13 to send items to Federal Reserve banks for purposes of exchange or of collection. Such nonmember State banks and trust companies will hereinafter be referred to as nonmember clearing banks. Each Federal Reserve bank shall exercise the functions of a clearing house and collect checks under the general terms and conditions hereinafter set forth, and each member bank and nonmember clearing bank shall cooperate fully in the system of check clearance and collection for which provision is herein made. SECTION 3. CHECKS RECEIVED FOR COLLECTION (1) Each Federal Reserve bank shall receive at par from member and nonmember clearing banks in its district, from other Federal 1 I REGULATION J Reserve banks, and from all member and nonmember clearing banks in other Federal Reserve districts which are authorized to route direct for the credit of their respective Federal Reserve banks, checks 1 drawn on all member and nonmember clearing banks of its district, and checks drawn on all other nonmember banks of its district which are collectible at par in funds acceptable to it. (2) Each Federal Reserve bank may receive at par from member and nonmember clearing banks in its district, checks drawn on all member and nonmember clearing banks in other Federal Reserve districts, and checks drawn on all other nonmember banks in other Federal Reserve districts which are collectible at par in funds acceptable to the collecting Federal Reserve bank. (3) No Federal Reserve bank shall receive on deposit or for collection any check drawn on any nonmember bank which cannot be collected at par in funds acceptable to the Federal Reserve bank. SECTION 4. TIME SCHEDULE AND AVAILABILITY OF CREDITS (1) Each Federal Reserve bank will publish a time schedule showing the time at which any item sent to it will be counted as reserve and become available for withdrawal or other use by the sending bank. For all checks received, the sending bank will be given immediate credit, or deferred credit, in accordance with such time schedule, and as provided below. (2) For all such checks as are received for immediate credit in accordance with such time schedule, immediate credit, subject to final payment, will be given upon the books of the Federal Reserve bank at full face value in the reserve account or clearing account upon day of receipt, and the proceeds will at once be counted as reserve and become available for withdrawal or other use by the sending bank; provided, however, that the Federal Reserve bank may in its discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which the Federal Reserve bank has not yet received payment in actually and finally collected funds. (3) For all such checks as are received for deferred credit in accordance with such time schedule, deferred credit, subject to final payment, will be entered upon the books of the Federal Reserve bank at full face value, but the proceeds will not be counted as reserve nor become available for withdrawal or other use by the sending bank until such time as may be specified in such time schedule,2 at which 1 A check is generally defined as a draft or order upon a bank or banking house, purporting to be drawn upon a deposit of funds, for the payment at all events of a certain sum of money to the order of a certain person therein named, or to him or his order, or to bearer, and payable on demand. * For rules for computation of reserves and penalties for deficiencies in reserves, see Regulation D, Sees. 2 and t. REGULATION J 3 time credit will be transferred from the deferred account to the reserve account or clearing account subject to final payment and will then be counted as reserve and become available for withdrawal or other use by the sending bank; provided, however, that the Federal Reserve bank may in its discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which the Federal Reserve bank has not yet received payment in actually and finally collected funds. SECTION 5. TERMS OF COLLECTION The Board of Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and nonmember clearing bank which sends checks to any Federal Reserve bank for deposit or collection shall by such action be deemed (a) to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; (b) to warrant its own authority to give the Federal Reserve banks such authority; (c) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys' fees and expenses of litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank's guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such checks; and (d) to guarantee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement of the sending bank. (1) A Federal Reserve bank will act only as agent of the bank from which it receives such checks and will assume no liability except for its own negligence and its guaranty of prior endorsements. (2) A Federal Reserve bank may present such checks for payment or send such checks for collection direct to the bank on which they are drawn or at which they are payable, or in its discretion may forward them to another agent with authority to present them for payment or send them for collection direct to the bank on which they are drawn or at which they are payable. (3) A Federal Reserve bank may, in its discretion and at its option, either directly or through or from an agent, accept in payment of or in remittance for such checks, cash, bank drafts, transfers of funds or bank credits, or other forms of payment or remittance, acceptable to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure of the drawee bank or any agent to pay or remit for such checks, nor for any loss resulting from the accept- 4 REGULATION J ance from the drawee bank or any collecting agent, in lieu of cash, of any other form of payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium of payment or remittance which may be accepted from the drawee bank or any collecting agent. (4) Checks received by a Federal Reserve bank which are payable in its own district will ordinarily be forwarded or presented direct to the banks on which they are drawn, and such banks will be required to remit or pay therefor at par in such one or more of the forms of payment or remittance authorized under paragraph. (3) hereof as may be acceptable to the Federal Reserve bank. (5) Checks received by a Federal Reserve bank payable in other districts will ordinarily be forwarded for collection to the Federal Reserve bank of the district in which such checks are payable; provided, however, that, where arrangements can be made satisfactory to the collecting bank or agent and to the Federal Reserve bank of the district in which such checks are payable, any such checks may be forwarded for collection direct to the bank on which they are drawn or at which they are payable, or may be forwarded for collection to another agent with authority to present them for payment direct to the bank on which they are drawn or at which they are payable. All such checks shall be handled subject to all the terms and conditions of this regulation. (6) With respect to any check sent direct by a member or nonmember clearing bank in one district to a Federal Reserve bank in another district, the relationships and the rights and liabilities existing between the member or nonmember clearing bank, the Federal Reserve bank of its district and the Federal Reserve bank to which the check is sent will be the same, and the relevant provisions of this regulation will apply, as though the member or nonmember clearing bank had sent such check to the Federal Reserve bank of its district with its endorsement and guaranty of prior endorsements and such Federal Reserve bank had sent the check to the other Federal Reserve bank with its endorsement and guaranty of prior endorsements. (7) Bank drafts received by a Federal Reserve bank in payment of or in remittance for checks handled under the terms of this regulation shall likewise be handled for collection subject to all the terms and conditions of this regulation. (8) The amount of any check for which payment in actually and finally collected funds is not received shall be charged back to the forwarding bank, regardless of whether or not the check itself can be returned. In such event, neither the owner or holder of any such REGULATION J 5 check, nor the bank which sent such check to the Federal Reserve bank for collection shall have any right of recourse upon, interest in, or right of payment from, any reserve balance, clearing account, deposit account, or other funds of the drawee bank or of any bank to which such checks have been sent for collection, in the possession of the Federal Reserve bank. No draft, authorization to charge, or other order, upon any reserve balance, clearing account, deposit account, or other funds of a paying, remitting, or collecting bank in the possession of a Federal Reserve bank, issued for the purpose of settling items handled under the terms of this regulation will be paid, acted upon, or honored after receipt by such Federal Reserve bank of notice of suspension or closing of such paying, remitting, or collecting bank. SECTION 6. OTHER RULES AND REGULATIONS Each Federal Reserve bank may also promulgate rules not inconsistent with the terms of the law or of this regulation, governing the sorting, listing, packaging, and transmission of items, and other details of its check clearing and collection operations. Such rules and regulations shall be set forth by the Federal Reserve banks in their letters of instruction to their member and nonmember clearing banks and shall be binding upon any member or nonmember clearing bank which sends any check to such Federal Reserve bank for collection or to any other Federal Reserve bank for the account of such Federal Reserve bank for collection. FEDERAL RESERVE BANK OF NEW YORK August 21, 1939 To each Member and Nonmember Clearing Bank of the Second Federal Reserve District (except Banks in the Territory assigned to the Buffalo Branch): We transmit herewith a printed copy of Regulation J of the Board of Governors of the Federal Reserve System, as amended effective September 1, 1939, relating to check clearing and collection, together with a printed copy of each of the following circulars of this bank: Circular No. 1970, effective September 1, 1939, entitled "Collection of Cash Items"; Circular No. 1971, effective September 1, 1939, entitled "New York Head Office Time Schedule". In connection with the issuance of the above mentioned regulation and circulars the Board of Governors of the Federal Reserve System has released for publication today a statement to the press reading as follows: The Board of Governors of the Federal Reserve System announced today that the Federal Reserve banks will put into effect on September 1, 1939 certain changes in their check collection procedure designed to give member banks more prompt credit for checks deposited with the Federal Reserve banks for collection and to reduce the amount of work required in preparing the checks for deposit with the Federal Reserve banks. Heretofore member banks have been given credit for checks deposited with the Federal Reserve banks in accordance with time schedules which were based on the actual time required to collect the checks. After September 1 the Federal Reserve banks will credit member banks within three days or less for all checks deposited with them for collection. Immediate credit or credit within one or two days will continue to be given for most checks. The Board's Regulation J relating to the clearance and collection of checks and the check collection circulars and time schedules of the Federal Reserve banks have been revised. Copies are being sent by the Federal Reserve banks to all member banks and to all other banks which maintain deposit accounts with the Federal Reserve banks. Member and nonmember clearing banks which have been granted permission to send cash items payable in other Federal Reserve districts direct to the Federal Reserve banks and branches of the districts in which such items are payable will be furnished promptly with a new supply of forms for use in reporting to us the amounts of such cash items. Additional copies of the above mentioned regulation and circulars will be furnished by this bank upon request. GEORGE L. HARRISON, President. FEDERAL RESERVE BANK OF NEW YORK August 21, 1939 To each Member and Nonmember Clearing Bank in the Territory assigned to the Buffalo Branch: We transmit herewith a printed copy of Regulation J of the Board of Governors of the Federal Reserve System, as amended effective September 1, 1939, relating to check clearing and collection, together with a printed copy of each of the following circulars of this bank: Circular No. 1970, effective September 1, 1939, entitled "Collection of Cash Items"; Circular No. 1972, effective September 1, 1939, entitled "Buffalo Branch Time Schedule". I n connection with t h e issuance of t h e above mentioned regulation a n d circulars t h e B o a r d of Governors of the F e d e r a l Reserve System has released for publication today a statement to the press reading as follows: The Board of Governors of the Federal Reserve System announced today that the Federal Reserve banks will put into effect on September 1, 1939 certain changes in their check collection procedure designed to give member banks more prompt credit for checks deposited with the Federal Reserve banks for collection and to reduce the amount of work required in preparing the checks for deposit with the Federal Reserve banks. Heretofore member banks have been given credit for checks deposited with the Federal Reserve banks in accordance with time schedules which were based; on the actual time required to collect the checks. After September 1 the Federal Reserve banks will credit member banks within three days or less for all checks deposited with them for collection. Immediate credit or credit within one or two days will continue to be given for most checks. The Board's Regulation J relating to the clearance and collection of checks and the check collection circulars and time schedules of the Federal Reserve banks have been revised. Copies are being sent by the Federal Reserve banks to all member banks and to all other banks which maintain deposit accounts with the Federal Reserve banks. Member and nonmember clearing banks which have been granted permission to send cash items payable in other Federal Reserve districts direct to the Federal Reserve banks and branches of the districts in which such items are payable will be furnished promptly with a new supply of forms for use in reporting to us the amounts of such cash items. Additional copies of the above mentioned regulation and circulars will be furnished by this bank upon request. GEORGE L. HARRISON, President.
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