Statement of Administration Policy: H.R. 28 - Expedited Funds Availability Act

(House)
(St Germain (D) Rhode Island and 147 others)

The administration recognizes that significant consumer concerns have been raised about funds availability and strongly believes that consumers should have access to their deposited funds as soon as humanly and technologically possible. Depository institutions should also disclose fully their check hold policies. The administration prefers the general approach of title VI of S. 790, as passed by the Senate, to H.R. 28. In its present form, H.R. 28 could result in substantially increased operating costs for depository institutions, which would in turn be passed on to consumers.

Title VI of S. 790 would require the Federal Reserve Board to: (1) adopt an interim regulation to eliminate unnecessarily long check hold periods in the short term and (2) expedite the availability of funds on a permanent basis by either automating and improving the check return process of making deposited funds available as soon as a depository institution receives provisional credit. H.R. 28, by contrast, requires depository institutions to abide by one rigid, legislatively-mandated standard, with little operational flexibility and with little regard for geographic or institutional differences.

The administration opposes section 11 of H.R. 28, which would reduce from six years to one year the period during which the Treasury may bring a reclamation action on a check that has been paid over a forged or unauthorized endorsement. An amendment of this nature should be considered only in connection with broader legislation limiting the payability of Treasury checks (i.e., to six months), as the administration proposed during the 99th Congress, and is proposing again this year.