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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-917

======================================================================



 
   EXPEDITED FUNDS AVAILABILITY DOLLAR LIMITS ADJUSTMENT ACT OF 2008

                                _______
                                

December 9, 2008.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 6871]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 6871) to amend the Expedited Funds Availability 
Act to provide a 1-time adjustment in certain dollar amounts to 
account for inflation over the 21 years since the enactment of 
such Act, to provide for future adjustments of such amounts on 
a regular basis, and for other purposes, having considered the 
same, report favorably thereon without amendment and recommend 
that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Performance Goals and Objectives.................................     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     5
Earmark Identification...........................................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    H.R. 6871, the ``Expedited Funds Availability Dollar Limits 
Adjustment Act of 2008,'' directs the Federal Reserve to issue 
regulations within a year to make an one-time adjustment to 
certain statutory dollar amount limits under the Expedited 
Funds Availability Act and to index these amounts at least 
every five years based on a cost-of-living adjustment.

                  Background and Need for Legislation

    The Expedited Funds Availability Act (EFAA), enacted in 
1987, establishes the maximum time periods that banks can hold 
funds deposited into transaction accounts before those funds 
must be made available for withdrawal. These time periods are 
set based upon the nature of the deposit and whether the 
deposited checks are drawn on banks in the same region (local 
checks) or in other regions (non-local checks). The Federal 
Reserve implements the EFAA under Regulation CC.
    Section 603 of the EFAA requires that banks give next-day 
availability for up to the first $100 deposited on any one 
business day by a check or checks that are otherwise not 
eligible for next-day availability. Section 603 of the EFAA 
also allows a bank to extend by one business day the time that 
funds deposited by local checks, non-local checks, or other 
checks deposited by a non-proprietary ATM are available for 
withdrawal by cash or other means. A bank that uses this 
extension must make $400 of those funds available for cash 
withdrawal (or the maximum amount allowable in the case of a 
withdrawal from an ATM but no more than $400) by no later than 
5 p.m. of the business day on which the funds are available 
based upon the maximum hold periods.
    Since the EFAA was enacted in the 1980s, inflation has 
reduced substantially the real value of the cash-withdrawal 
limits of $100 and $400 included under the statute. For this 
reason, the Federal Reserve noted in the Report to the Congress 
on the Check Clearing for the 21st Century Act of 2003 that was 
released in April 2007 that ``[i]ncreasing these limits may 
materially benefit consumers, particularly those with lower 
incomes who maintain low account balances and need quicker 
availability for deposited checks.'' (Report, page 28).

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing entitled, ``Implementation of the Check 
Clearing for the 21st Century Act,'' on Wednesday, April 20, 
2005, (109th Congress), to review the implementation of the Act 
and its impact on consumers, including the appropriateness of 
the time periods and amounts limits under the EFAA in light of 
the changes allowed under the Act. The following witnesses 
testified at the hearing:
     Ms. Louise L. Roseman, Director, Division of 
Reserve Bank Operations and Payment Systems, The Federal 
Reserve Board of the United States
     Ms. Elizabeth A. Duke, Chairman, American Bankers 
Association
     Mr. Mark E. Budnitz, Professor, Georgia State 
University College of Law
     Mr. David Hayes, Chairman, Independent Community 
Bankers of America
     Mr. Elliott C. McEntee, President and CEO, NACHA--
The Electronic Payments Association

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 16, 2008, and ordered H.R. 6871, Expedited Funds 
Availability Dollar Limits Adjustment Act of 2008, reported to 
the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the bill to the House with a favorable recommendation 
was agreed to by a voice vote.
    No amendments were offered during consideration of the 
bill.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 6871 directs the Federal Reserve to issue regulations 
within a year to make an one-time adjustment to certain 
statutory dollar amount limits under the Expedited Funds 
Availability Act and to index these amounts at least every five 
years based on a cost-of-living adjustment.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 26, 2008.
Hon. Barney Frank,
Chairman, Committee on Financial Services, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6871, the 
Expedited Funds Availability Dollar Limits Adjustment Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Grant 
Driessen.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 6871--Expedited Funds Availability Dollar Limits Adjustment Act

    The Expedited Funds Availability Act (Title VI of Public 
Law 100-86) was enacted in 1987 and standardized the schedule 
under which funds deposited into transaction accounts of 
depository institutions become available for withdrawal. It 
requires all banks to make the first $100 deposited by check 
available for cash withdrawal on the next business day, and an 
additional $400 a day later if the depository institution is 
located locally (or four days later if not located locally). 
H.R. 6871 would increase those figures from $100 to $175 and 
from $400 to $700, respectively. Additionally, H.R. 6871 would 
require that adjustments for inflation be made to those figures 
at least every five years.
    Based on information from the Board of Governors of the 
Federal Reserve, CBO estimates that the bill would have no 
effect on the federal budget. Any budgetary effects on the 
Federal Reserve would be recorded as changes in revenues, but 
CBO estimates that the Federal Reserve would incur no 
significant additional costs to issue regulations required by 
the bill. CBO estimates that the bill would have no effect on 
federal spending.
    By increasing the amount of funds from certain deposits 
that must be made available for withdrawal within standard time 
periods, H.R. 6871 would impose a private-sector mandate, as 
defined in the Unfunded Mandates Reform Act (UMRA), on 
depository institutions. To comply with the mandate, banks and 
credit unions would need to adjust their electronic systems to 
allow account holders access to the additional funds, and many 
institutions could have to convert some of their interest-
bearing holdings to have more cash available at any given time. 
According to industry sources the cost per institution would 
not be significant. However, because of the large number of 
depository institutions that would have to comply with the 
mandates (more than 16,000), CBO estimates that the aggregate 
cost of the mandate would probably exceed the annual threshold 
established in UMRA for private-sector mandates ($136 million 
in 2008, adjusted annually for inflation) in at least one of 
the first five years the mandate is in effect.
    H.R. 6871 contains no intergovernmental mandates as defined 
in UMRA and would not affect the budgets of state, local, or 
tribal governments.
    The CBO staff contact for this estimate is Grant Driessen. 
This estimate was approved by G. Thomas Woodward, Assistant 
Director for Tax Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 6871 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Establishes as a short title the ``Expedited Funds 
Availability Dollar Limits Adjustment Act of 2008.''

Section 2. 1-time adjustment of dollar amounts

    Under the Expedited Funds Availability Act (EFAA), the 
first $100 of a check deposited into a transaction account at a 
depository institution must be made available for use at the 
opening of business on the business day after a deposit is 
made. The bill would raise the $100 amount to $175. Under the 
EFAA, a depository institution that opts to delay the 
availability of deposited funds by one business day for cash 
withdrawals must exempt $400 from the amount that can be held 
and make the $400 available by 5 p.m. on the business day 
specified under the availability schedules under Regulation CC. 
The bill would increase this amount to $700. The bill directs 
the Federal Reserve to issue regulations to implement this 
Section within one year of the date of the enactment of the 
bill.

Section 3. Subsequent indexation of dollar amounts

    The bill directs the Federal Reserve to index for inflation 
the dollar amounts referenced in Section 2 of the bill, at 
least every five years. The cost-of-living adjustment is based 
on the published annual value of the Consumer Price Index for 
all-urban consumers published by the Secretary of Labor.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                    EXPEDITED FUNDS AVAILABILITY ACT


TITLE VI--EXPEDITED FUNDS AVAILABILITY

           *       *       *       *       *       *       *


SEC. 603. EXPEDITED FUNDS AVAILABILITY SCHEDULES.

  (a) Next Business Day Availability For Certain Deposits.--
          (1) * * *
          (2) Government checks; certain other checks.--Funds 
        deposited in an account at a depository institution by 
        check shall be available for withdrawal not later than 
        the business day after the business day on which such 
        funds are deposited in the case of--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) the first [$100] $175 deposited by check 
                or checks on any one business day;

           *       *       *       *       *       *       *

  (b) Permanent Schedule.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Time period adjustments for cash withdrawal of 
        certain checks.--
                  (A) * * *
                  (B) 5 P.m. cash availability.--Not more than 
                [$400] $700 (or the maximum amount allowable in 
                the case of a withdrawal from an automated 
                teller machine but not more than [$400] $700) 
                of funds deposited by one or more checks to 
                which this paragraph applies shall be available 
                for cash withdrawal not later than 5 o'clock 
                post meridian of the business day on which such 
                funds are available under paragraph (1) or (2). 
                If funds deposited by checks described in both 
                paragraph (1) and paragraph (2) become 
                available for cash withdrawal under this 
                paragraph on the same business day, the 
                limitation contained in this subparagraph shall 
                apply to the aggregate amount of such funds.

           *       *       *       *       *       *       *


SEC. 607. MISCELLANEOUS PROVISIONS.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Adjustment for Inflation.--
          (1) In general.--Before the end of the 6-year period 
        beginning on the date of the enactment of the Expedited 
        Funds Availability Dollar Limits Adjustment Act of 2008 
        and at least every 5 years after the expiration of such 
        period, each dollar amount contained in sections 
        603(a)(2)(D) and 603(b)(3)(B) shall be increased by an 
        amount determined by the Board to be equal to--
                  (A) such dollar amount, multiplied by
                  (B) the cost-of-living adjustment for such 
                period.
          (2) Cost of living adjustment.--For purposes of 
        paragraph (1), the cost-of-living adjustment for any 
        period is the percentage (if any) by which--
                  (A) the published annual value of the 
                Consumer Price Index for the calendar year 
                preceding the date of the determination by the 
                Board under paragraph (1), exceeds
                  (B) the published annual value of the 
                Consumer Price Index for the calendar year 
                2008.
          (3) Consumer price index defined.--For purposes of 
        paragraph (2), the term ``Consumer Price Index'' means 
        the Consumer Price Index for all-urban consumers 
        published by the Secretary of Labor.
          (4) Rounding.--If any increase determined under 
        paragraph (1) is not a multiple of $25, such increase 
        shall be rounded to the nearest multiple of $25.
          (5) Publication.--The Board shall publish the 
        adjusted amount for each dollar amount determined under 
        paragraph (1) in the Federal Register promptly upon 
        making such determination.
          (6) Effective date.--The adjusted amounts shall take 
        effect at the end of the 120-day period beginning on 
        the date by which a determination is required under 
        paragraph (1).

           *       *       *       *       *       *       *