Compliance Bulletin

New Regulation CC Dollar Threshold Effective July 21, 2011
July 20, 2011

Section 1086 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amends the Expedited Funds Availability Act (the “EFA,” implemented by the Federal Reserve Board’s Regulation CC at 12 CFR Part 229) by increasing the amount of deposited funds that banks must make available for withdrawal by the next business day from $100 to $200.

On March 25 the Federal Reserve Board released proposed amendments to Regulation CC to, among other things, facilitate the transition to fully electronic interbank check collection and return. That rule has not been finalized and is not directly related to the Dodd-Frank Act. In that rulemaking the Board proposed revisions to the model forms used to disclose banks’ funds availability policies that may reflect changes to the increased threshold. However, any changes will not be made in time by the effective date. The current model disclosure forms set forth in Appendix C to Regulation CC provide that a bank must make $100 of a deposit available on the next business day. Banks need to amend their disclosures to reflect the new $200 amount. Regulation CC at 12 CFR Section 229(e) gives banks 30 days after implementation of a change to their availability policy (that expedites availability of funds) to send a notice to holders of consumer accounts of the change. The Dodd-Frank Act also requires the various dollar thresholds in Regulation CC to be adjusted every five years after December 31, 2011 by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the nearest multiple of $25. According to the Board, the adjustment will affect the amount of funds a bank is required to make available from a deposit of a check not subject to next-day availability, by cash or similar means, and under the new account and large-deposit exceptions. The damage limitations for violating Regulation CC will also be adjusted. The precise method of indexing is to be worked out with the new Bureau. The effective date of the new $200 threshold is July 21, 2011, so the new disclosure will be required by 30 days thereafter.

The information contained in this CBA Regulatory Compliance Bulletin is not intended to constitute, and should not be received as, legal advice. Please consult with your counsel for more detailed information applicable to your institution.

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