Lawmakers Want Credit Unions To Check TheFloat
WASHINGTON - (12/09/04) -- A group of prominent lawmakerscalled on the Federal Reserve and financial institutions this weekto make sure that consumers share in the benefits of expeditedfunds availability provided by the new electronic check act, knownas Check 21. In separate letters to Federal Reserve Chairman AlanGreenspan and financial trade groups, including CUNA and NAFC,leaders of the House Financial Services Committee urged that banksand credit unions review the 'hold time' they impose on checks inlight of the new law, lest all of the financial benefits of thereduction in check clearing time accrue to those depositoryinstitutions. "We recognize that check holds are important tools toprevent fraud and to ensure the integrity of the payments system;however, we also believe that the reduction in clearing timesshould result in a corresponding reduction in check hold times,"the group, led by Committee Chairman Michael Oxley of Ohio, wrote.The group urged the Fed to review the effects of Check 21 on thespeed of payments and whether the Fed should amend its Reg CC whichsets hold times for checks. The new law, which establishes legalauthority for electronic checks, is expected to significantlyshorten clearing time for checks, making billions of dollars inadditional interest, or 'float', available for financialinstitutions and consumers.