Bill summaries are authored by CRS.

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Passed House amended (05/05/1987)

(Measure passed House, amended, roll call #80 (388-5))

Expedited Funds Availability Act - Requires the Board of Governors of the Federal Reserve System to begin to develop an expedited funds availability system which shall be implemented no later than three years and 90 days after enactment of this Act. Provides that such system shall require that funds deposited in an account of a depository institution by local and in-state checks be available for withdrawal the business day after deposit and that funds deposited by all other checks be available on the fourth business day after deposit. Requires the Board to reduce the established time period for the availability of nonlocal checks to as short a time as possible and equal to the average check processing time under an improved check clearing system. Allows the Board to adjust the time period for certain local checks in special circumstances. Allows a time period extension of one business day for deposits made in institutions in noncontiguous States or territories and by checks drawn on institutions not located in the same State or territory. Lists considerations for the Board in establishing such system which include providing for the automated return of unpaid checks, a uniform endorsement standard, and direct notification of nonpayment. Directs the Board to report to the Congress every six months on its actions to implement such system and within two years after enactment of this Act on the effects of temporary schedules for funds availability established under this Act.

Establishes specific time limits for funds availability for various types of deposits. Provides for next day availability for cash, the cash portion of a deposit, wire transfers, checks of $100 or less, checks drawn on in-state branches of the receiving depository institution or branches located in the same check processing region, U.S. Treasury checks endorsed only by the payee, State and local treasury checks endorsed only by the payee and deposited in special envelopes at manned branches, cashier's checks, certified checks, teller's checks, and depository checks endorsed only by the payee and deposited in special envelopes at manned branches.

Sets forth a schedule, to be terminated upon implementation of the expedited funds availability system, providing that: (1) checks drawn on local originating depository institutions shall be available on the third business day after deposit during the one-year period beginning 90 days after enactment of this Act and on the second business day after deposit during the subsequent two years; and (2) checks drawn on nonlocal originating depository institutions shall be available for withdrawal on the seventh business day after deposit.

Authorizes the Board to make certain adjustments in such time limits.

Sets forth time limit exceptions and special time limits which shall apply: (1) to new accounts, deposits by checks in excess of $5,000, checks redeposited after being returned, repeated overdrafts, and foreign checks; and (2) under specified emergency conditions.

Authorizes the Board to suspend the applicability of this Act to any classification of checks directly associated with an unacceptable level of losses due to check-related fraud. Requires the Board to transmit a report justifying any suspension to specified congressional committees.

Provides that the availability schedules required by this Act shall not apply to a depository institution which has reasonable cause to believe that a check is uncollectible from the originating depository institution. Prohibits basing such a determination on any class of checks or persons. Requires a depository institution which claims such reasonable cause to provide immediate written notice to the depositor of such cause and a statement of the day the funds desposited will be available for withdrawal. Requires depository institutions to retain records of each such notice given. Prohibits the assessment of any overdraft fee in cases where notice was not given to the depositor and the amount of the check is collected from the originating depository institution.

Prohibits any depository institution from freezing funds in an account because other funds deposited in such account by check are not yet available for withdrawal pursuant to this Act.

Directs each institution to inform employees of, and ensure employee compliance with, the requirements of this Act.

Provides that State laws providing for shorter time periods for the availability of funds deposited in a State-chartered institution shall supersede this Act and shall apply to all federally-insured depository institutions located in such State.

Requires interest to accrue on funds deposited in an interest-bearing account of an institution beginning on the business day on which the institution receives provisional credit for such funds. Exempts from such interest requirement: (1) funds deposited by a check which is returned unpaid; and (2) accounts at a credit union which begins the computation of interest or dividends at a later date with respect to all funds and provides notice of such interest payment policy.

Requires a depository institution to meet specified disclosure requirements concerning its general policy on the availability for withdrawal of funds deposited by check. Authorizes the Board to publish model disclosure forms and clauses for common transactions.

Reduces from six years to one year the limitation on the time period in which the Department of the Treasury can reclaim from the presenting depository institution or other endorsers amounts paid on Treasury checks that have benn paid over forged or unauthorized endorsements. Allows the United States to bring a civil action to enforce any liability of an endorser, transferor, depository, or fiscal agent on a forged or unauthorized signature or endorsement on, or any change in, a check or warrant issued by the Secretary of the Treasury, the U.S. Postal Service, or any disbursing official or agent within one year after the check or warrant is presented for payment (or within four years if the United States gives an endorser written notice of a claim).

Declares that this Act supersedes State law, including the Uniform Commercial Code, except as specified.

Sets forth provisions governing: (1) the administrative enforcement of this Act; and (2) the civil liability of institutions that fail to comply with this Act.

Requires the Board to study and report to the Congress on the feasibility of modernizing and accelerating the check payment system through the development of an electronic clearinghouse process utilizing existing telecommunications technology to avoid the necessity of actual presentment of the paper instrument to a payor institution before such institution is charged for the item.