Magazine article American Banker

Fed Asks Joint Action on Delayed Availability

Magazine article American Banker

Fed Asks Joint Action on Delayed Availability

Article excerpt

The board has been concerned for some time with certain aspects of the practice of financial institutions delaying their customers' ability to withdraw funds deposited in the form of a check. As I'm sure you know, there is a good deal of public concern about unreasonable delays, the lack of adequate advance disclosure of delay policies, and the problems customers can experience. While some delays may be justified because of the time it takes for unpaid checks to be returned, and the resulting risk of loss if depositors have immediate use of the funds, it does appear that more could be done to minimize the problems caused by the practice.

The board has encouraged the industry to address the issue voluntarily, favoring that approach over a legislative or regulatory response to the problem. And it is in that context that we would like to explore with you and with the other financial institution supervisory agencies the possibility of issuing a joint policy statement on delayed availability. We feel that a joint agency statement would be appropriate in this case, given that the practice exists with all types of financial institutions. A policy statement could assist industry groups in urging their member institutions to act and provide a basis for specific action by institutions that delayed availability.

In order to accomplish these objectives, the policy statement could, for example, call on financial institutions that delay availability to:

* Review their policies and consider reducing the delay periods to the extent possible, consistent with prudent business practices. …

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