[Congressional Record Volume 148, Number 127 (Wednesday, October 2, 2002)]
[Senate]
[Page S9852]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSON (for himself and Mr. Carper):
  S. 3034. A bill to facilitate check truncation by authorizing 
substitute checks, to foster innovation in the check collection system 
without mandating receipt of checks in electronic form, and to improve 
the overall efficiency of the Nation's payments system, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. JOHNSON. Mr. President, I am proud to sponsor the Check 
Truncation Act, which will be a significant step in improving the 
Nation's check payment system.
  The Act improves America's check payments system by allowing banks to 
exchange checks electronically. Current law requires banks to 
physically present and return original checks, a tedious, antiquated 
and expensive process. This legislation will also reduce infrastructure 
costs for banks, allowing for more flexibility and greater cost savings 
for the consumer.
  In the days following September 11, 2001, when planes across the 
country remained grounded, banks were forced to take drastic steps to 
ensure the shipment of checks from bank to bank. Check payments across 
the country were delayed, which opened up possibilities for processing 
errors and fraud. Electronic payments, on the other hand, continued to 
be processed in a safe and timely fashion during the crisis.
  Processing challenges confront banks in my State of South Dakota 
every winter. Deep snowfalls and vast distances between small-town 
banks and processing centers add significant costs to physical 
transportation of checks. These costs trickle down to consumers, and 
everyone ends up paying the price of our outdated system.
  I am proud to introduce this legislation, which would help to ensure 
the financial stability of our system in the event of another attack, 
and would increase its efficiency day-to-day. It is the right time to 
change our banking laws to give electronic versions of checks the same 
legal validity as paper checks, so America's financial institutions can 
provide customers with faster check clearing and better access to 
liquid funds in both good times and times of crisis.
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