Faster Check Processing in the 7th District

The Federal Reserve today announced that the Des Moines branch office would no longer be processing checks for collection. Instead, the checks will go directly through the Chicago head office for the District. An interesting twist for us teaching check collection is how this affects the time in which banks must make funds available to depositors under Regulation CC. As a result of the change, some checks that would be considered "nonlocal" will now be "local" checks subject to a more speedy funds availability rule. Under 229.12 depositary institutions must make funds available for withdrawl not later than the second business day following the banking day of deposit for local checks. For banks using a delayed availability policy, this change will mean depsitors will get access to money earlier.

This change is not the first of this type, as the Federal Reserve has already begun consolidation of check processing offices. In the end, the Federal Reserve will retain only four check processing regions, making many deposits available earlier as more checks will be "local."

— JSM