[Congressional Record Volume 151, Number 16 (Tuesday, February 15, 2005)]
[Extensions of Remarks]
[Pages E232-E233]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 CONSUMER CHECKING ACCOUNT FAIRNESS ACT

                                 ______
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                       Tuesday, February 15, 2005

  Ms. MALONEY. Mr. Speaker, today I am reintroducing the Consumer 
Checking Account Fairness Act. This bill solves a pressing consumer 
banking problem. Under the Check 21 Act that we passed last year, money 
will leave consumers' accounts faster, but become available at the same 
old pace. Current check hold times, combined with the speeding up of 
check processing, create real problems for consumers.
  The new Check 21 law facilitates the electronic clearing of checks, 
which means that checks consumers write will clear sooner. However, 
banks are still allowed to place the same long check holds on 
consumers' deposits.
  For example: Jane Doe gets paid on Friday, deposits her paycheck 
Friday evening, and writes a check at the grocery store the next day. 
The check to the grocery store on Saturday clears on Sunday or Monday, 
but because Jane's bank puts a hold on her deposit, her paycheck funds 
cannot be used to cover her checks until the next Wednesday--even if 
the paycheck has in fact already cleared. If Jane's employer uses a 
non-local bank to issue her paycheck, Jane's bank can make her wait 
till the next Monday--ten calendar days--before her pay is available to 
cover the checks she writes.
  Even if Jane's paycheck actually clears within a day or two, her bank 
does not have to lift the hold. Instead, Jane's bank can: bounce her 
check and charge her a ``non-sufficient funds'', NSF fee of$20 to $35. 
The grocery store may also charge a returned check fee or clear the 
check but charge a $20 to $35 ``bounce protection'' fee, and possibly a 
per day fee as well for each day before deposited funds are available 
to cover the check. Bounce protection may be a service she has never 
requested--and it may be invoked by the bank even though Jane had made 
a deposit to cover the check before writing the check.
  This is patently unfair to consumers. Check hold times should be 
shortened, so consumers can use their deposits to cover the checks they 
write after making a deposit.
  Check 21 only required that the Federal Reserve Board study check 
hold times, and gave the Federal Reserve Board until March 2007 to 
finish that study.
  The ``Consumer Checking Account Fairness Act'' solves this problem. 
The bill:
  Reduces check hold times by a day for deposits up to $7,500.
  Counts Saturday as a business day toward the check hold period if the 
bank takes money out of consumer accounts on Saturdays.
  Requires banks to process credits before debits: i.e. add deposits 
before deducting checks.
  Prevents banks from charging bounced check fees when the deposit to 
cover the check has actually cleared but the hold period has not yet 
been completed.
  Increases the ``small check'' amount, for which there is faster funds 
availability, from $100 to $500.
  Requires banks that wish to charge for so-called ``bounce 
protection'' to get the consumer to request this feature before 
charging fees to the consumer for it.
  Clarifies that deposits at proprietary ATMS are cleared as fast as 
deposits at a teller.
  Requires that banks who charge a fee for a ``substitute check'' under 
Check 21 cannot insist that the consumer get a substitute check in 
order to have the bank put funds missing due to a processing error back 
into the consumer's account within ten business days.
  The Consumer Checking Account Fairness Act is balanced and sensible. 
It preserves the ability of banks to prevent fraud. For example, it 
leaves in place the ability of a bank to impose a longer hold period 
for special circumstances, such as a new account or a recent history of 
bounced checks on an account.

[[Page E233]]

Also, the bill does not require banks to issue ``substitute checks'' 
under the Check 21 law without any fee; instead it simply says that if 
the bank decides to charge for the substitute check, then the bank 
cannot insist that the consumer get that document in order to exercise 
the consumer's right to a ten business day timeframe to get back funds 
lost due to a check processing problem, such as a check being paid 
twice.
  Banks benefit from faster check-processing facilitated by Check 21. 
They should also have to give their customers faster credit for 
deposits.

                          ____________________