[House Report 110-917]
[From the U.S. Government Publishing Office]
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).
* * * * * * *