The Federal Reserve Board recommended no change to the hold times that banks can impose on checks while they wait to see if the items will clear.
In a report to Congress published Monday, 30 months after the Check Clearing for the 21st Century Act took effect, the Fed said that even though banks can now determine more quickly whether there are insufficient funds to pay a check, the improvement "has not been sufficient to warrant changes" to the maximum hold times — up to five days for nonlocal checks, under the Expedited Funds Availability Act of 1987.
Check 21 is shortening hold times in a different way, the Fed said. As the central bank consolidates check-processing centers, each center serves a larger geographic area, turning nonlocal checks with five-day holds into local checks with two-day holds. In 2003 the Fed operated 45 centers, but by the time the current round of closings is complete by mid-2008, it will have 18.
