[Federal Register Volume 68, Number 102 (Wednesday, May 28, 2003)]
[Rules and Regulations]
[Pages 31592-31596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13030]


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FEDERAL RESERVE SYSTEM

12 CFR Part 229

[Regulation CC; Docket No. R-1150]


Availability of Funds and Collection of Checks

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board of Governors is publishing a final amendment to 
appendix A of Regulation CC that updates the routing numbers for 
Federal Reserve Banks and Federal Home Loan Banks. Banks generally must 
provide next-day or second-day availability for checks drawn on these 
routing numbers. This amendment also reorganizes and clarifies existing 
information in the introductory material preceding the routing number 
list.
    The Board also is providing information about a series of future 
amendments that the Board will make to appendix A to reflect the 
restructuring of check processing functions within the Federal Reserve 
System. These amendments collectively will reduce

[[Page 31593]]

the number of check processing regions listed in appendix A from 44 to 
32, thereby resulting in more checks in the affected regions being 
local to one another. These amendments will take effect on a staggered 
basis beginning in the second half of 2003 and ending in late 2004. The 
Board will publish each amendment in the Federal Register at least 60 
days before the effective date.

DATES: The final rule will become effective on July 28, 2003.

FOR FURTHER INFORMATION CONTACT: Jack K. Walton II, Assistant Director 
(202/452-2660), Michele Braun, Manager (202/452-2819), or Jeffrey S. H. 
Yeganeh, Senior Financial Services Analyst (202/728-5801), Division of 
Reserve Bank Operations and Payment Systems; or Adrianne G. Threatt, 
Counsel (202/452-3554), Legal Division; for users of Telecommunications 
Devices for the Deaf (TDD) only, contact 202/263-4869.

SUPPLEMENTARY INFORMATION:

Background

    Regulation CC establishes the maximum period a bank may wait 
between receiving a deposit and making the deposited funds available 
for withdrawal.\1\
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    \1\ For purposes of Regulation CC, the term ``bank'' refers to 
any depository institution, including commercial banks, savings 
institutions, and credit unions.
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    Generally, a bank must make funds available for withdrawal within 
one or two days of deposit if the funds are deposited by certain types 
of checks that have a relatively low risk of being returned and the 
deposit meets the other conditions described at Sec.  229.10(c) of 
Regulation CC.\2\ Items generally subject to next- or second-day 
availability include checks drawn on the U.S. Treasury; U.S. Postal 
Service money orders; checks drawn on a Federal Reserve Bank or a 
Federal Home Loan Bank; checks drawn by a state or unit of general 
local government; cashier's, certified, or teller's checks; and checks 
drawn on the same branch or another branch of the depositary bank if 
both branches are located within the same Federal Reserve check 
processing region. A depositary bank also must give next-day 
availability for up to the first $100 of any check or checks deposited 
on the same banking day that are not otherwise subject to the next-day 
availability rule.
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    \2\ Other requirements for next-day availability are that the 
check be deposited in person to an employee of the depositary bank 
into an account held by the payee of a check. In some cases, next-
day availability also requires the use of a special deposit slip 
and, in the case of a check issued by a state government or unit 
thereof, that the depositary bank be located in the state in which 
the check was issued. If a deposit meets all the requirements for 
next-day availability except that it was not made in person to an 
employee of the bank, the check is entitled to second-day 
availability. Otherwise, the check is subject to the general 
availability schedule at 12 CFR 229.12 that applies to local and 
nonlocal checks. In addition, banks may invoke the exception holds 
described at 12 CFR 229.13 with respect to checks that generally are 
subject to next-day or second-availability.
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    For checks that are not subject to the next- or second-day 
availability rules discussed above, depositary banks generally must 
provide faster availability for funds deposited by a ``local check'' 
than by a ``nonlocal check''. A check drawn on a bank is considered 
local if it is payable by or at a bank located in the same Federal 
Reserve check processing region as the depositary bank. A check drawn 
on a nonbank is considered local if it is payable through a bank 
located in the same Federal Reserve check processing region as the 
depositary bank. Otherwise, a check is nonlocal.
    Appendix A to Regulation CC contains a routing number guide that 
assists banks in determining the maximum permissible hold periods for 
most deposited checks.\3\ The appendix lists the 9-digit routing 
numbers for U.S. Treasury checks, postal money orders, and checks drawn 
on Federal Reserve Banks and Federal Home Loan Banks. Appendix A also 
lists each Federal Reserve check processing office and the first four 
digits of the routing numbers, known as the Federal Reserve routing 
symbol, of the banks that are served by that office. Banks whose 
Federal Reserve routing symbols are grouped under the same office are 
in the same check processing region and thus are local to one another.
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    \3\ Official checks (certified, cashier's and teller's checks) 
are the exception, because they are identified by routing number 
information that is not included in the appendix.
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Final Amendment to Appendix A

    Over the past few years, the Federal Reserve Banks and Federal Home 
Loan Banks have changed their check-related operations, including the 
routing numbers they use. The Board accordingly is updating appendix A 
to delete retired routing numbers and insert newly added ones.
    With respect to the Federal Reserve Bank routing number list, the 
Board is deleting routing numbers 0112 0048 8 and 0214 0950 9; 
correcting the placement of two existing routing numbers, 0220 0026 6 
and 0519 0002 3; and adding a new routing number, 0711 0711 0.
    With respect to the Federal Home Loan Bank routing number list, the 
Board is deleting the following numbers: 0640 0091 0; 0654 0348 0; 0724 
1338 2; 0820 0125 0; 1020 0603 8; 1030 0362 9; 1040 0019 7; 1130 1750 
8; 1211 3994 4; and 1222 4014 6. In addition, the Board is adding the 
following numbers: 0430 1862 2 and 1240 0287 4.
    The Board also has reorganized and clarified the existing 
introductory text of appendix A.
    These amendments become effective July 28, 2003.

Information About Future Changes to Appendix A

    A Federal Reserve study released in 2002 found that the number of 
checks written in the United States had declined from approximately 50 
billion annually in the mid-1990s to about 40 billion annually in 2002. 
Correspondingly, the number of checks processed by the Federal Reserve 
Banks has also declined in recent years. The Federal Reserve Banks have 
decided to reduce the number of locations at which they process checks 
in response to this changing trend in check usage and to position 
themselves more effectively to meet the cost recovery requirements of 
the Monetary Control Act of 1980. Thirteen Reserve Bank offices will no 
longer process checks, and the checks currently processed at those 
offices will be processed at other nearby offices, as follows:

------------------------------------------------------------------------
  Offices that will no longer process         Offices to which check
                checks:                   processing will be transferred
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Pittsburgh, PA                           Cleveland, OH
Richmond, VA                             Baltimore, MD
Charleston, WV                           Cincinnati, OH
Columbia, SC                             Charlotte, NC
Miami, FL                                Jacksonville, FL
Indianapolis, IN                         Cincinnati, OH
Milwaukee, WI                            Chicago, IL
Peoria, IL\4\                            Chicago, IL
Little Rock, AR                          Memphis, TN
Louisville, KY                           Cincinnati, OH
Omaha, NE                                Des Moines, IA
El Paso, TX                              Dallas, TX
San Antonio, TX                          Dallas, TX
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\4\ The Peoria office does not serve a separate check processing region.
  Rather, it is a satellite office of the Federal Reserve Bank of
  Chicago that is located in the Chicago check processing region.

    Because this restructuring will reduce the number of check 
processing regions, some banks that now are nonlocal to one another 
will become local. As a result, the status of some nonlocal checks in 
the affected regions will change. Specifically, some checks that are 
drawn on and deposited at banks located in the affected regions that 
currently are nonlocal checks will become local checks subject to 
faster

[[Page 31594]]

availability schedules. Banks in the affected regions therefore might 
need to realign their internal operating systems to reflect the 
restructuring. Depending on their funds availability practices, banks 
also might need to modify their funds availability schedules and 
related disclosures to reflect any improved availability of funds 
resulting from the restructuring. Section 229.18(e) of Regulation CC 
requires that banks notify account holders who are consumers within 30 
days of implementing a change that improves the availability of funds.
    The restructuring of Reserve Bank check processing operations will 
take place in several phases, beginning in the second half of 2003 and 
ending in late 2004. The Board will amend appendix A in connection with 
each phase of the restructuring to delete the name of the office(s) 
that will no longer process checks and transfer the affected Federal 
Reserve routing symbols to another check processing office.\5\ The 
Board will announce each phase of the restructuring and the associated 
amendments to appendix A at least 60 days prior to the effective date 
of the amendment in order to give affected banks ample time to make 
processing changes, and, if necessary, amend their availability 
schedules and related disclosures and provide their customers with 
notice of any changes to their availability schedules.
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    \5\ Appendix A to Regulation CC has been amended on several 
occasions in the past to reflect the restructuring of the Reserve 
Banks' check processing operations. In 1994, the Utica regional 
check processing center began serving the Buffalo check processing 
territory (59 FR 48789, Sept. 23, 1994). In 1996, the East 
Rutherford operations center began serving the Jericho check 
processing territory (61 FR 25389, May 21, 1996). In 1997, the 
Boston head office began serving the Lewiston check processing 
territory (62 FR 26220, May 13, 1997).

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[[Page 31595]]

    Some affected banks might prefer to make some or all of their 
processing and availability changes prior to the effective dates of the 
relevant amendments. For the information and planning needs of affected 
banks, the Board today is describing below all the Federal Reserve 
routing symbol changes to appendix A that will be made between now and 
the end of 2004.
1. Cleveland.
    The operations of the Pittsburgh branch will be transferred such 
that banks with the following Federal Reserve routing symbols will be 
local to the Cleveland head office:

0410                                  2410
0412                                  2412
0430                                  2430
0432                                  2432
0433                                  2433
0434                                  2434
 

2. Cincinnati.
    The operations of the Charleston and Indianapolis offices and the 
Louisville branch will be transferred such that banks with the 
following Federal Reserve routing symbols will be local to the 
Cincinnati branch:

0420                                  2420
0421                                  2421
0422                                  2422
0423                                  2423
0515                                  2515
0519                                  2519
0740                                  2740
0749                                  2749
0813                                  2813
0830                                  2830
0839                                  2839
0863                                  2863
 

3. Baltimore.
    The operations of the Richmond head office will be transferred such 
that banks with the following Federal Reserve routing symbols will be 
local to the Baltimore branch:

0510                                  2510
0520                                  2520
0521                                  2521
0522                                  2522
0540                                  2540
0550                                  2550
0560                                  2560
0570                                  2570
 

4. Charlotte.
    The operations of the Columbia office will be transferred such that 
banks with the following Federal Reserve routing symbols will be local 
to the Charlotte branch:

0530                                  2530
0531                                  2531
0532                                  2532
0539                                  2539
 

5. Jacksonville.
    The operations of the Miami branch will be transferred such that 
banks with the following Federal Reserve routing symbols will be local 
to the Jacksonville branch:

0630                                  2630
0631                                  2631
0632                                  2632
0660                                  2660
0670                                  2670
 

6. Chicago.
    The operations of the Milwaukee office will be transferred such 
that banks with the following Federal Reserve routing symbols will be 
local to the Chicago head office:

0710                                  2710
0711                                  2711
0712                                  2712
0719                                  2719
0750                                  2750
0759                                  2759
 

7. Des Moines.
    The operations of the Omaha branch will be transferred such that 
banks with the following Federal Reserve routing symbols will be local 
to the Des Moines office:

0730                                  2730
0739                                  2739
1040                                  3040
1041                                  3041
1049                                  3049
 

8. Memphis.
    The operations of the Little Rock branch will be transferred such 
that banks with the following Federal Reserve routing symbols will be 
local to the Memphis branch:

0820                                  2820
0829                                  2829
0840                                  2840
0841                                  2841
0842                                  2842
0843                                  2843
 

9. Dallas.
    The operations of the El Paso and San Antonio branches will be 
transferred such that banks with the following Federal Reserve routing 
symbols will be local to the Dallas head office:

1110                                  3110
1111                                  3111
1113                                  3113
1119                                  3119
1120                                  3120
1122                                  3122
1123                                  3123
1140                                  3140
1149                                  3149
1163                                  3163
 

    The Federal Reserve routing symbols assigned to all other Federal 
Reserve branches and offices will remain the same.

Administrative Procedure Act

    The Board has not followed the provisions of 5 U.S.C. 553(b) 
relating to notice and public participation in connection with the 
adoption of the final rule. The revisions to the introductory language 
and routing number lists are technical in nature. In addition, the 
routing number revisions are required by the statutory and regulatory 
definitions of ``check-processing region.'' Because there is no 
substantive change on which to seek public input, the Board accordingly 
has determined that the Sec.  553(b) notice and comment procedures are 
unnecessary.

Regulatory Flexibility Act Certification

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the Board certifies that the final rule will not have a 
significantly adverse economic impact on a substantial number of small 
entities. These amendments are technical, and the routing number 
changes are required by law. Moreover, these amendments apply to all 
banks regardless of their size. Many small banks generally provide 
next-day availability for all checks and will not be affected by this 
amendment. For the subset of small banks that does distinguish between 
checks subject to next-day availability and those subject to longer 
holds, the final rule should necessitate only minimal programming 
changes. Some of these affected banks might also have to modify their 
funds availability disclosures and notify both new and existing 
customers of the modified funds availability schedules.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Board has reviewed the final rule 
under the authority delegated to the Board by the Office of Management 
and Budget. The final rule contains no new collections of information 
and proposes no substantive changes to existing collections of 
information pursuant to the Paperwork Reduction Act.

12 CFR Chapter II

List of Subjects in 12 CFR Part 229

    Banks, Banking, Federal Reserve System, Reporting and recordkeeping 
requirements.

Authority and Issuance

0
For the reasons set forth in the preamble, the Board is amending 12 CFR 
part 229 to read as follows:

[[Page 31596]]

PART 229--AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS 
(REGULATION CC)

0
1. The authority citation for part 229 continues to read as follows:

    Authority: 12 U.S.C. 4001 et seq.


0
2. Appendix A to Part 229 is amended as follows:
    a. Introductory paragraphs A and B are revised and a new paragraph 
C is added.
    b. The heading and text of the Federal Reserve Offices routing list 
are revised.
    c. The Federal Home Loan Banks routing list is revised.
    The additions and revisions read as follows:

Appendix A to Part 229--Routing Number Guide to Next-Day Availability 
Checks and Local Checks.

    A. Each bank is assigned a routing number by Thomson Financial 
Publishing Inc., as agent for the American Bankers Association. The 
routing number takes two forms: a fractional form and a nine-digit 
form. A paying bank generally is identified on the face of a check 
by its routing number in both the fractional form (which generally 
appears in the upper right-hand corner of the check) and the nine-
digit form (which is printed in magnetic ink along the bottom of the 
check). Where a check is payable by one bank but payable through 
another bank, the routing number appearing on the check is that of 
the payable-through bank, not the payor bank.
    B. The first four digits of the nine-digit routing number (and 
the denominator of the fractional routing number) form the ``Federal 
Reserve routing symbol,'' and the first two digits of the routing 
number identify the Federal Reserve District in which the bank is 
located. Thus, 01 will be the first two digits of the routing number 
of a bank in the First Federal Reserve District (Boston), and 12 
will be the first two digits of the routing number of a bank in the 
Twelfth District (San Francisco). Adding 2 to the first digit 
denotes a thrift institution. Thus, 21 identifies a thrift in the 
First District, and 32 denotes a thrift in the Twelfth District.
    C. Each Federal Reserve check processing office is listed below, 
followed by the Federal Reserve routing symbols of the banks that 
are located within the check-processing region served by that 
office. Because some check processing regions cross Federal Reserve 
District lines, there are some cases in which banks in different 
Federal Reserve Districts are located in the same check-processing 
region and therefore considered local to each other. For example, 
banks in Fairfield County, Connecticut are located in Second 
District and have Second District routing numbers (0211 or 2211), 
but the Windsor Locks office of the First District processes the 
checks of these banks. Thus, as indicated below, checks drawn on 
banks with 0211 or 2211 routing numbers would be local for First 
District banks served by the Windsor Locks office but would be 
nonlocal for other Second District depositary banks.
* * * * *

                          FEDERAL RESERVE BANKS
0110 0001 5                           0720 0029 0
0111 0048 1                           0730 0033 8
0210 0120 8                           0740 0020 1
0212 0400 5                           0750 0012 9
0213 0500 1                           0810 0004 5
0220 0026 6                           0820 0013 8
0310 0004 0                           0830 0059 3
0410 0001 4                           0840 0003 9
0420 0043 7                           0910 0008 0
0430 0030 0                           0920 0026 7
0440 0050 3                           1010 0004 8
0510 0003 3                           1020 0019 9
0519 0002 3                           1030 0024 0
0520 0027 8                           1040 0012 6
0530 0020 6                           1110 0003 8
0539 0008 9                           1120 0001 1
0610 0014 6                           1130 0004 9
0620 0019 0                           1140 0072 1
0630 0019 9                           1210 0037 4
0640 0010 1                           1220 0016 6
0650 0021 0                           1230 0001 3
0660 0010 9                           1240 0031 3
0710 0030 1                           1250 0001 1
0711 0711 0
 


                         FEDERAL HOME LOAN BANKS
0110 0053 6                           0740 0101 9
0212 0639 1                           0810 0091 9
0260 0973 9                           0910 0091 2
0410 0291 5                           1010 0091 2
0420 0091 6                           1011 0194 7
0430 0143 5                           1110 1083 7
0430 1862 2                           1119 1083 0
0610 0876 6                           1210 0070 1
0710 0450 1                           1240 0287 4
0730 0091 4                           1250 0050 3
 


    By order of the Board of Governors of the Federal Reserve 
System, May 20, 2003.
Jennifer J. Johnson
Secretary of the Board.
[FR Doc. 03-13030 Filed 5-27-03; 8:45 am]
BILLING CODE 6210-01-S