May 02, 2014

NAFCU sends Fed Reg CC recommendations

May 5, 2014 – NAFCU supports keeping the current expeditious-return requirement for electronically returned checks in the Federal Reserve Board's Regulation CC, Angela Meyster, the association's regulatory affairs counsel, said in a comment letter Friday.

The Fed, in a request for comments regarding Subparts C and D of the rule, proposed two possible frameworks to encourage depositary and paying credit unions and banks to send and receive returned checks electronically. Meyster explained that NAFCU supports the second alternative.

"NAFCU believes that the Board should adopt Alternative 2 and apply the current expeditious return requirement to electronically returned checks," she wrote. "Doing so would ensure that depositing credit unions could expect timely and efficient check processing and grant members full access to deposited funds as quickly as possible. Very few credit unions have agreements with other non-Federal Reserve institutions regarding the sending of electronically returned checks, and Alternative 2 would promote clear expectations and standards in the absence of private ordering."

Meyster said NAFCU believes the Fed should apply the same-day settlement rule to electronic checks in order to enhance the benefits for credit union members and to increase regulatory consistency with paper checks. She also said a notice-of-repayment requirement should be applied to paper return checks of any amount. Meyster also noted that many credit unions may require their members to endorse a check with sufficient information such that a second depository institution would know not to accept the original paper check for deposit, making the Fed's proposed indemnity provisions for remote deposit capture unnecessary.

Finally, she asked the Fed to extend the proposed effective date after publication of the final rule from six months to a year so credit unions can have enough time to prepare.