WASHINGTON -
That's because in reducing the Fed's check processing offices from 45 in 2003 to just four by 2011 most checks will come under the two-day hold time allowed for "local" checks from the same Fed region, as opposed to the five-day hold allowed for "non-local" checks transported between regions, one Fed payments official told attendees to CUNA's Payments Systems Conference.
Louise Roseman, director the Fed's operations, said the Fed decided that the Check 21 law is too new and implementation too sparse for the Fed to shorten hold times in order to take advantage of the expedited payments under the law. But consumers are already benefiting from the new law, which gave electronic check images the same legal standing as paper checks.
"Most consumers are already getting availability for funds even faster than the law requires," Roseman said. And the continued decrease in the Fed's check processing office - already down to 20 this year - will act as a de facto shortening of the hold times when the Fed moves to just four regional offices by 2011, she said.
The Fed's Check 21 report, issued last fall, dampened chances for Democratic lawmakers pushing legislation that would shorten check-hold times in order to give consumers greater benefits from the new law.
A bill introduced in the last Congress would have shortened check-hold times, but the measure was never voted. The Democrats argued that consumers should benefit as much as financial institutions from the reduced float enabled by the electronic check law.
