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WP-8031
FRB
RA Aug. 18, 1981
FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 9133
August 25, 1981
"1
CHECK COLLECTION
— Amendment to Regulation J
— Implementation of Access to and Pricing of This Bank’s Services
To A ll D epository Institutions in the
Second Federal Reserve District, and Others Concerned:
In accordance with the Monetary Control Act of 1980, the Federal Reserve System made its check collection
services available to all depository institutions and began charging for the use of such services on August 1, 1981.
Enclosed is the text of an amendment to Subpart A of Regulation J, “ Collection of Checks and Other Items and
Transfer of Funds,” of the Board of Governors of the Federal Reserve System, implementing that action. Also
enclosed is the Second Supplement to this Bank’s Operating Circular No. 4 on the “ Collection of Cash Item s,” and
Appendix H to that operating circular setting forth our schedule of charges for check collection services. Together,
these documents implement the pricing of and expanded access to our check collection services.
The amendment to Regulation J redefines the terms “ sender” and “ bank” so that each term includes •
“ depository institutions” as defined in section 19(b) of the Federal Reserve Act, as amended by the Monetary
Control Act.
A description of our check collection services was included in our Circular No. 9046, dated April 2, 1981. A
copy of that circular will be furnished upon request directed to our Circulars Division.
If you have any questions regarding our new access or pricing policies, or want to obtain additional information
on that subject, please feel free to contact any of the following officers of this Bank:
A t the Head Office John F. Sobala, Assistant Vice President (Tel. No. 212-791-5997)
A t our Cranford Office Fred A. Denesevich, Regional M anager (Tel. No. 201-272-9000)
A t our Jericho Office Joseph M. O ’Connell, Regional M anager (Tel. No. 516-997-4500)
A t our Utica Office Robert C. Thoman, Vice President (Tel. No. 315-736-8321)
A t our Buffalo Branch Robert J. M cDonnell, Operations Officer (Tel. No. 716-849-5022)
http://fraser.stlouisfed.org/
f Louis
Federal Reserve Bank of St.
A nthony
M.
Solom on,
President.
)
Federal Reserve Bank
of New Y ork
Second Supplement to
Operating Circular No. 4
(Revised effective November 13, 1980)
Effective August 12, 1981
COLLECTION OF CASH ITEMS
Access and Pricing
To All Depository Institutions in the
Second Federal Reserve District, and Others Concerned:
Operating Circular No. 4 is amended as follows:
1.
The following sentence is added to the end of paragraph 17:
Senders that by arrangement deliver cash items payable in other Districts to us or to
another designated location for consolidated shipment are requested to notify us prior
to making any change in that arrangement.
2.
Paragraphs 18, 19 and 20 are deleted.
3.
Paragraph 46 and its heading are amended to read as follows:
Charges
46. Our Schedule of Prices (Appendix H to this operating circular) shows the
prices at which we offer our various cash item collection services. We may make the
charge to the account maintained or used by the sender or other bank requesting the
service.
A n th o n y M . So l o m o n ,
President.
Federal Reserve Bank
of New York
Appendix H to
Operating Circular No. 4
_ Effective August 1, 1981 _
SCHEDULE OF PRICES
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
1. We offer cash item collection services at the prices indicated in the
following schedules. The charges are expressed in cents per item and are
charged to the account maintained or used by the institution that sends the item
to this Bank.
Mixed and Other Fed cash letters
2. We accept mixed and other Fed cash letters at each designated office
only from an institution located in the territory served by that office.
Sent To:
Federal
Reserve
Office
Head Office
Buffalo
Jericho
Cranford
Utica
>
Mixed
Cash
Letters
Other
Fed
Cash Letters
NonMachineable
(cents p e r item )
(cents p e r item)
(cents p e r item)
2.87
5.30
9.04
1.66
3.99
6.08
Other cash letters
3.
Other cash letters are accepted at the collecting Federal Reserve office
from an institution located in any Federal Reserve office territory. If the items
are sent by consolidated shipment, a surcharge of 0.64 cents per item is added
for each item for the use of Federal Reserve transportation.
[Enc. Cir. No. 9133]
Sent To:
Federal
Reserve
Office
City
County
or RCPC
Package
Sort
(cents p e r item)
(cents p e r item)
(cents p e r item)
Boston
Lewiston
| 1.60
Windsor Locks (
1.81
0.42
1.65
5.54
2.74
2.87
0.47
—
9.04
► 1.51
1.66
0.79
1.46
6.08
1.79
2.30
0.87
1.98
5.33
►1.48
1.92
0.82
—
5.12
1.39
1.67
1.29
1.37
1.40
1.85
1.97
1.50
1.52
1.75
0.67
0.63
0.49
0.44
0.52
►1.46
1.86
0.98
2.36
1.46
1.65
1.24
1.41
2.94
1.57
1.99
1.50
1.82
0.94
0.56
0.73
0.48
0.61
—
—
6.29
3.97
5.88
3.23
3.59
St. Louis
Little Rock
Louisville
Memphis
' 2.06
2.51
0.78
—
5.09
Minneapolis
Helena
\ 1.80
1
2.22
0.62
2.10
5.60
New York
Buffalo
Jericho
Cranford
Utica
Philadelphia
Cleveland
Cincinnati
Pittsburgh
Columbus
Richmond
Baltimore
Charlotte
Columbia
Charleston
Atlanta
Birmingham
Jacksonville
Nashville
New Orleans
Miami
Chicago
Detroit
Des Moines
Indianapolis
Milwaukee
Group
Sort
NonMachineable
(cents p e r item) (cents p e r item)
t
2
—
—
—
—
—
5.54
5.86
5.24
4.68
5.30
6.13
—
—
—
r
Sent To:
Federal
Reserve
Office
Kansas City
Denver
Oklahoma City
Omaha
Dallas
Houston
San Antonio
El Paso
City
County
or RCPC
Package
Sort
(cents p e r item)
(cents p e r item)
(cents p e r item)
2.12
1.24
1.52
1.27
2.80
1.63
1.90
1.76
0.45
0.72
0.67
0.46
0.89
—
7.55
7.98
6.94
6.26
l 1.74
2.22
0.80
1.64
7.19
1.71
0.58
—
7.99
San Francisco >
Los Angeles
Portland
►1.54
Salt Lake City
Seattle
4.
Group
Sort
NonMachineable
(cents p er item) (cents p e r item)
—
—
We reserve the right to amend this Appendix at any time.
A n t h o n y M . So l o m o n ,
President.
3
Board of Governors of the Federal Reserve System
COLLECTION OF CHECKS AND OTHER ITEMS
AND TRANSFER OF FUNDS
A M E N D M E N T TO R E G U L A T IO N J
(effective August 12, 1981)
[Docket No. R-0357]
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Final rule.
SUMMARY:
The Board has amended Suhpart A of Regulation J f governing
the collection of checks and other items by Reserve Banks, to imple
ment the Monetary Control Act of 1980,
This amendment redefines the
terms "sender" and "bank" so that each term includes "depository insti
tutions" as defined in section 19(b) of the Federal Reserve Act, as
amended by the Monetary Control Act.
EFFECTIVE DATE:
August 12, 1981.
FOR FURTHER INFORMATION CONTACT:
Lee S. Adams, Senior Counsel (202/452-3623),
or Joseph R. Alexander, Attorney (202/452-2489), Legal Division, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551.
SUPPLEMENTARY INFORMATION:
The Monetary Control Act of 1980, Title I
of Pub. L. No. 96-221, 94 Stat. 132, expands access to Reserve Bank
check collection services to all depository institutions.
The Board
is amending Subpart A of Regulation J to bring this regulation into
conformance with this expanded access by broadening the definition of
"sender" in Subpart A to include a depository institution as defined
in section 1 9 (b) of the Federal Reserve Act.
The amendment also defines the term "bank" to include a depository
institution as defined in section 19(b).
The Consumer Checking Account
Equity Act of 1980, Title III of Pub. L. No. 94-221, 94 Stat. 145, authorized
depository institutions (as defined in 12 U.S.C. § 1832(b)) to offer
NOW accounts and credit unions to offer share draft accounts beginning
December 31, 1980.
The Board believes depository institutions (including
credit unions) should be considered "banks" (at least to the extent
that they offer third-party payment accounts equivalent to checking
accounts), for purposes of Article 4 of the Uniform Commercial Code
("U.C.C.") and Subpart A of Regulation J.
[Enc. Cir. No. 9133]
-2-
The Board issued this amendment (along with several other
amendments to Subpart A) for comment on April 27, 1981. The majority
of those commenting on the proposals favored adopting this amendment.
Some commentators did express concern that defining nonbank depository
institutions (such as credit unions and savings and loan associations)
as banks could foster public confusion regarding the differences between
these institutions and commercial banks.
Several comments, while favoring
approval of the amendment, urged the Board to take steps to insure that
the identification of nonbank depository institutions as banks be strictly
limited to the cash item collection field.
The Board has considered these comments and has decided to
adopt the amendments as proposed.
Subpart A follows very closely the
provisions of the U.C.C. and the Board believes that where possible
the terminology used should be the same.
Under the U.C. C . , nonbank
payors must pay or dishonor an instrument before the close of business
on the day presentment is made.
U.C.C. § 3-506(2).
Payor banks, however,
are given deferred posting rights by Article 4 of the U.C.C.
The Board
believes that the best way to implement the congressional intent that
nonmember institutions be given access to Federal Reserve services on
the same basis as member banks is to amend Regulation J to insure that
nonmember institutions be accorded deferred posting and other rights
and responsibilities associated with check clearing operations under
Article 4. To avoid confusion between Article 4 and Subpart A, the
Board has defined nonbank depository institutions as banks for purposes
of Regulation J. With this action, however, the Board does not mean
to suggest that there are no longer any differences between banks and
nonbank depository institutions, and the Board does not intend by this
amendment to affect any other laws or regulations which establish dis
tinctions among the various types of depository institutions.
Final Regulatory Flexibility Act Analysis
Hie Board has considered the requirements imposed by the
Regulatory Flexibility Act, 5 U.S.C. $§ 601-612, with respect to the
impact of the rulemaking on small financial institutions.
The Board
does not believe that the amended rule will impose additional reporting,
recordkeeping, or other compliance burdens on such small businesses,
and consequently the Board need not consider alternatives to the rule
that would minimize its impact on small businesses.
Finally, no other
federal regulations duplicate, overlap, or conflict with the amended
Regulation J.
Pursuant to its authority under section 13 of the Federal
Reserve Act, as amended, 12 U.S.C. $ 342; section 16 of the Federal
Reserve Act, 12 U.S.C. §§ 248(o), 360; and section ll(i) of the Federal
Reserve Act, 12 U.S.C. § 248 (i), the Board hereby amends Regulation J
(12 C.F.R. pt. 210) as follows:
-3 -
In section 210.2, new paragraph (b) is added, and existing
paragraphs (b) through (k) are redesignated paragraphs (c) through (1)
and revised to read as follows:
SECTION 210.2— DEFINITIONS
As used in this subpart, unless the context otherwise requires:
*
*
*
*
*
(b) "Bank" includes a depository institution as defined in
section 19 of the Federal Reserve Act (12 U.S.C. $ 461(b)).
(c) "Bank draft" means a check drawn by one bank on another
bank.
(d) "Banking day" means a day during which a bank is open
to the public for carrying on substantially all its bank
ing functions.
(e) "Cash item" means:
(1) a check other than one classified as a noncash item
under this section; or
(2) any other item payable on demand and collectible at
par that the Reserve Bank of the District in which
the item is payable is willing to accept as a cash
item.
(f) "Check" means a draft, as defined in the Uniform Commercial
Code, that is drawn on a bank and payable on demand.
(g) "Item" means an instrument for the payment of money,
whether negotiable or not, that is:
(1) payable in a Federal Reserve District-^
("District");
(2) sent by a sender to a Reserve Bank for handling under
this subpart; and
1/
For purposes of this subpart, the Virgin Islands and Puerto Rico
are deemed to be in the Second District, and Guam and American Samoa
in the Twelfth District.
-4 -
(3) collectible in funds acceptable to the Reserve Bank
of the District in which the instrument is payable.
Unless otherwise indicated, "item" includes both cash
and noncash items. "Item" does not include a check that
cannot be collected at p a r o r an "item" as defined
in section 210.26 that is handled under subpart B.
(h) "Nonbank payor" means a payor of an item, other than a
bank.
(i) "Noncash item" means an item that a receiving Reserve
Bank classifies in its operating circulars as requiring
special handling.
The term also means an item normally
received as a cash item if a Reserve Bank decides that
special conditions require that it handle the item as
a noncash item.
(j) "Paying bank" means:
(1) the bank by which an item is payable, unless the item
is payable or collectible through another bank and
is sent to the other bank for payment or collection;
or
(2) the bank through which an item is payable or collectible
and to which it is sent for payment or collection.
(k) "Sender" means any of the following that sends an item
to a Reserve Bank:
a depository institution, a clearing
institution, another Reserve Bank, an international organi
zation, a foreign correspondent, or a branch or agency
of a foreign bank maintaining reserves under section 7
of the International Banking Act of 1978 (12 U.S.C. $$ 347d,
3105).
(1) "Depository institution" means a depository institution
as defined in section 19(b) of the Federal Reserve
Act.
(12 U.S.C. § 461(b))
2/ The Board publishes a "Memorandum on Exchange Charges," listing
the banks that would impose exchange charges on cash items and other
checks forwarded by Reserve Banks and therefore would not pay at par.
-5 -
(2) "clearing institution" means:
(i)
an institution that is not a depository institu
tion, but maintains with a Reserve Bank the
balance referred to in the first paragraph of
section 13 of the Federal Reserve Act (12 U.S.C.
$ 342); or
(ii) a corporation that maintains an account with
a Reserve Bank in conformity with section 211.4
of this chapter (Regulation K ) .
(3) "International Organization" means an international
organization for which a Reserve Bank is empowered
to act as depository or fiscal agent and maintains
an account.
(4) "Foreign correspondent" means any of the following
for which a Reserve Bank maintains an account:
a
foreign bank or banker, a foreign state as defined
in section 25(b) of the Federal Reserve Act (12 U.S.C.
§ 632) , or a foreign correspondent or agency referred
to in section 14(e) of that Act (12 U.S.C. $ 358).
(1) "State" means a State of the United States, the District
of Columbia, Puerto Rico, or a territory, possession,
or dependency of the United States.
By order of the Board of Governors August 13, 1981.
( s ig n e d )
W illia m W. W ile s
William W. Wiles
Secretary of the Board
[SEAL]
@FedFRASER