Conference 7.286::dcu

     Something STINKS here and its a THREE letter word   DCU!
    
    I wanted to deposite a $2700 BANK check into my checking account
    and use it.  WHOOOOO, Mr. Badger, we must hold it for 5 working
    days [a week in layman's terms].
    Its not a cashiers's, certified and not a treasurer's, so DCU gets
    to sit on it.  This is new.  They're hiding behind this new law.
    
    DCU is making dam hard to use them.
    ed

Hi Ed.  I'm normally quite critical of DCU, but I don't think its 
their fault right now.  Some people in banking who I trust give me the 
sense that they have to obey the new rules TO THE LETTER OF THE LAW.  
one person commented that if they waived a hold on my check, the next 
person could sue for unfair discrimination.  My advice, ride this one 
out (that's what CRTs are for  ;-))

	I'm suprised they must follow these new laws to the letter rather than
the law detailing minimum requirements. I agree that DCU should treat each
member the same (not waive a hold for one member's check and enforce it for
the next); but, I don't see why DCU can't be easier on its members than other
banks or why the rules have to get worse.

Chuck

                I've been in a couple of banks since the new law went
        into effect, and I've seen the same story presented on signs
        that DCU is trying to sell us. It sure looks like the banking
        industry is either all confused, or more likely, they all saw a
        good way to get more float (their usage of your money) out of
        the regulation by telling us that they had to do that particular
        way.
                
                /s/     Bob

    RE: .4
    
    Whoa!  I think you're misinterpreting the effect of a hold.  They
    don't get the float.  The amount you deposit is credited to your
    account when you make the deposit, and you start earning interest
    on it from that day.  A hold simply means that you're not allowed
    to withdraw the money until the hold is off.  This prevents check
    kiting and other sorts of fraud.
    
       Gary

    Now it only allows legal "kiting"; don't be fooled, the banks and
    other financial institutions will use - to the maximum - the ability
    to invest our money in short-term investments.  Since you can't
    use or withdraw the money, they can use it along with other deposits
    with waiting periods to make money for themselves.  You don't see
    them putting in your account the interest they make on your money
    which can't be touched for a specific time period, now do you...That
    will be the day.
    
    Jay
    

    Um.  if you're earning interest on money in the bank, then it has
    to be earning them more than what you're getting in interest.  It
    must be that by forcing you to keep your hands off the money for
    a few days the bank can loan out more money, based on that amount.
    For example, if you have to keep your hands off of $20, I think
    it works out that this allows the bank to loan out about $100 during
    that time.  If suddenly everybody has to leave what works out to
    be an average of $20 more than is left now, this means the bank
    can loan out an extra $100.  So, it is not your money that actually
    earns part of the interest you are payed, but the fact that it gives
    the bank the ability to earn more money in interest from other loans.
    If anything, this resembles a forced savings plan.
    
    Steve

                The way "float" works is that the bank is guaranteed to
        have that money on hand for the period of time that you can't
        touch it. They can then very safely lend it out and earn
        interest on it without keeping as large a reserve (in case you
        withdrew your funds) if any at all. 
                
                The bank regularly lends out the money that it has on
        deposit (your money and mine) to make more money. This is what
        pays for the buildings, staff, the interest that we get, etc.
        State and Federal regulations limit the amount that they can
        loan compared to the amount on deposit. This is to cover you or
        me when we go in and ask for funds from our account (either in
        cash or via having a check clear). Because we can make no
        demands on this "held" money for a known period of time, the
        bank is clear to lend that amount for that period of time with
        no hassle.
                
                /s/     Bob

    re: .6
    
    Yes, I do see them paying me the interest on money that still has a
    hold.  At least I did the last time I was able to calculate things, but
    which was before the new rules.  I opened a new Super NOW account about
    a year ago, and my first month's interest was a full month's worth,
    even though my initial deposit was held for a few days.  As far as I
    know, this mechanism is still in effect, though I suppose it could vary
    from bank to bank.  Does anyone know for sure?  I'll repeat the
    calculation as soon as I can make a convenient deposit in a convenient
    account. 
    
    re: .7
    
    I think you have that backwards.  If I deposit $100 into a demand
    account (which is what checking accounts are, since you can demand
    your money at any time), then the banks must keep a percentage that amount
    as there reserves.  I'm not sure whether the percentage is set by
    the FDIC or the Federal Reserve Bank, but I'm sure it's there. 
    It certainly isn't true that if you deposit $20, then they have
    $100 to work with.  Perhaps you're thinking of margin accounts at
    brokerages?
    
    re: last few
    
    I'm afraid they haven't made things clearer to me.  I believe that
    the new rules are beneficial to the banks.  Anything that prevents
    customers from kiting checks, or cuts down on the amount of float
    available to customers is going to increase revenue for the banks.
    If that's what your claiming, then fine, I understand that part.
    
    However, the increased revenue that they're getting is what I might
    call the non-float -- the money that they get because we don't get
    as much float as we could before.  If we earned no interest on a
    deposit until the hold ended, then I would say the banks were keeping
    the float.  As long as we're still earning interest from day of
    deposit, then we're the ones getting the float.  Any extra revenue
    for the banks should be called something else (unfair comes to mind
    as a suitable adjective).
    
       Gary

re:    < Note 121.9 by TOKLAS::FELDMAN "PDS, our next success" >
    
   > I think you have that backwards.  If I deposit $100 into a demand
   > account (which is what checking accounts are, since you can demand
   > your money at any time), then the banks must keep a percentage that amount
   > as there reserves.  I'm not sure whether the percentage is set by
   > the FDIC or the Federal Reserve Bank, but I'm sure it's there. 
   > It certainly isn't true that if you deposit $20, then they have
   > $100 to work with. 
    
    The reserve ratio is set by the Fed. The multiplier is indeed 5, if the
    reserve ratio is 20%. Consider this example: 
    
    Person A deposits $20 in Bank A; Bank A can now loan 80% of that
    deposit, or $16. Person B borrows $16 and deposits it in Bank B;
    Bank B can now loan 80% of that deposit, or $12.80; Person C 
    borrows $12.80 and deposits it in Bank C; Bank C can now loan 80%
    of that deposit, or 10.24; Person D borrows....
    
    Add up all the new deposits across the banking system: the total
    is $100.

THe Feds set the reserve ratio, and occasionally tweak it up and down 
to contract/expand the money supply (i.e., raise/lower interest 
rates).

I believe it sits somewhere around 20%.  I.e., if you deposit $1, 
they can lend out $.80
/j

                There was no atttempt to claim that the banks would not
        be paying you interest on an interest bearing account for the
        period of the hold (although I didn't make that clear). But
        remember, the bank charges MORE for someone to borrow money than
        they pay us in interest. That is where they make the money. And
        it seems to me that having a guaranteed amount of money on hand
        for a guaranteed period, makes that lending easier - thus more
        money is made by the bank.
                
                /s/     Bob

Sheshh!!  Is there any way to actually ***cash*** a check any more?

Jim.

    Excuse my ignorance, but what is "kiting checks"???

There are two terms one learns in Accounting 101 that refer to covering 
improprieties in the management of checking accounts to effect an 
embezzlement.  These two terms are kiting and lapping; they are often used 
(incorrectly) as synonyms.

Since I haven't had Acctg 101 since 1971, and my Wixon/Kell/Bedford reference
book is home, I'll try it from memory:

Kiting is the process of "time shifting" on checking accounts.  It usually 
involves the use of separate checking accounts in geographically dispersed 
banks.  A shortage of funds is covered by the delay it takes for these banks 
to clear each other's checks --- aka "float".  The embezzler delays detection 
because the checking account reconciliations do not catch the shortage.  BTW, 
this is what was alleged in the E F Hutton scandal of a few years back.

Lapping, if I remember correctly, refers to bogus entries on the firm's books
used to cover a shortage of funds.  In a similar way to kiting, the error is 
hidden for as long as possible by an elaborate "shell game".  Eventually, the 
shortage is uncovered, many times by accident.


In the context of the prior note that used the term "kiting", it refers to
individuals taking advantage of float in their personal checking transactions,
and not to any type of fraud.  If you draw funds prior to their availability, 
such as a paying a bill in anticipation of your paycheck, especially when the 
payee is remote, that is like kiting.
It is analogous to charging a purchase on a credit card in mid-March and using
the bank's money until early May --- something most of us do all the time. 
I'm surprised the banking system still tolerates this.  (Boycott debit cards!)

I'm having problems understanding the basis for this new legislation. 
Is this a case of "Congress told banks to clean up thier collective acts,
so banks told Congress - okay, but we have to have this in return..."
                                        
It's been quite a few years since i took microeconomics in college, but i
did a report on how the Federal Reserve System works.  As i recall, all
member banks (of the FRS, i.e. chartered financial institutions) have
accounts at the Federal Reserve Bank.  

When a member bank presents debits and credits at the clearing house, against
other member banks, the balancing is done by computers.  For example;
First Interstate Bank (FIB) and Bank of America (BOA) [i don't bank at either,
it's just a good example] are members.  FIB presents 500m in debits against
BOA (money owed to) and BOA presents FIB with 600m in debits, leaving BOA
'crediting' the account of FIB with 100m (600m - 500m = 100m).  This money
never leaves the fed, it's just left on account (banks have checking accounts
with the fed is maybe a better example...)

Anyhow, the tapes are generated with the account (bank specific) numbers with
transactions occurring.  The next day (the clearing operation is supposedly
overnite), the bank processes the tapes and update's your balance.

So with that in mind, why is there a need to put a hold on funds? Does it take
ten working days to 'clear' a transaction?  I think not.  My theory (not to
be confused with the one by Ann Elk ;^>) is that Congress took a lot of heat on
this subject from the consumer (slow clearing -up to 30days) on some
transactions, and decided to make the Lawyers (Bankers--WASP?) stop sticking it
to the consumer for their >excessive< personal (the verb is debateable) gain.

The Bankers retaliated with "Oh..that will hurt our performance (i.e. bottom
line), the absolute minimum we could stand would be 10 days".  Congress
relented. The bankers were happy (not as much as they used to be).  The average
joe on the street is happy (thinks Congress did good by him for a change). 
Congress get's a feather in it's cap, when in fact all they did was take a
unbearable situation and make it less painful.

OBTW, I just got stung on this...I send $400 every month to my mom.  Never in
the past 4 years, did any of my checks have a 10 day hold placed, till now!

Comments?

-jp-

The theory is:

A checking account (like we all probably have) is a contract to transfer
funds from me to you with my bank acting as my agent.  The reason for
the delay has to do with getting the physical check (the signed contract)
from you or your agent (your bank) to my bank for verification of the
signature.

Bruce

                I'm sure that what we have here is a typical case of a
        few (those banks that abused the hold priveledge) spoiling it
        for the many (those of us who don't cause any trouble).
                
                I sorta wish that I was in the same setup that I had for
        many years before DEC would direct deposit to my bank. I used
        Shawmut for the direct deposit, and wrote a check for the entire
        amount to deposit into my "real" checking account at another
        bank. I then took some money out for cash and wrote the checks
        to pay my bills on the second bank. One time, one of the tellers
        started to put a hold on the Shawmut check, and I explained to
        her what I was doing, she called her supervisor over (who new
        me) and from that day forth, my Shawmut checks were never held.
        I sure would like to fight that battle today!!!!
                
                /s/     Bob

Re: < Note 121.17 by FROSTY::HADDAD >
    -< Sorry but there's more to it than that... >-

    Hi Bruce,
    
    I'm afraid I'm gonna have take issue with what you said here...
    
Point 1:  A checking account (like we all probably have) is a contract to 
    	  transfer funds from me to you with my bank acting as my agent. 

    No, it is an instrument of withdrawal, i.e. a note if you will.
    The contract was your request to open an account and your signing
    of the signature card.
    
Point 2:  The reason for the delay has to do with getting the physical
    	  check (the signed contract) from you or your agent (your bank) 
    	  to my bank for verification of the signature.

    Nope, signatures, as per the norm, are *not* checked!  Only when
    there is a dispute in regards to the transaction will it be checked.
    Think of it this way, how many checks are written by everyone in
    your town in one day?  How many people are there in a bank that
    verify your signature against the signature card?  A bank is not
    going to spend the human availabilty resource on this. It's just
    too inefficient (and we know how greedy banks are!).  
    
    My original theory (check clearing) was mostly correct.  I thought
    about what you said, and reviewed my college notes on the subject.
    The term I was looking for is called the Automated Clearing House
    (ACH).  I'll use a description that was in the Oklahoma City FRB
    pamplet that I have:
    
    Mrs. Jones sends a check to Macy's in NYC for a purchase she wants
    to make (funds marked but allocated: FLOAT) --->  A
    
    Macy's recieves the check, deposits it to its bank, and ships the
    merchandise. [She is officialy on the float; Macy's bank has given
    Macy's credit {which Money Supply # is this?}] ---->  B
    
    The Bank credits Macy's account and presents the check to the Regional
    Federal Reserve Bank ACH (if it was a local check, it would go to the
    local ACH) for 'clearing'. ----> C
    
    The ACH transfers x amount of dollars from her Bank's account at
    the FED to Macy's Bank account (also at the Fed), and passes the
    computer tapes (and paper) of the transaction for her banks' 
    reconcilliation of her account. ----> D
    [this is covered under Regulation J of the Fed. Res. Act]
    	    
    	A -->  B -->  C --> D
    
    [I'm overlooking the reverse trail of money that Macy's bank may
    owe her bank, for non-related, in this example]
    
    The Bankers' concern is is that they are temporarily out xxx million 
    dollars [no longer earning interest at the FED], while a percentage of 
    these instrument of withdrawal [checks] are worthless!  Therefore,
    that's why you see a penalty for a bad check - you cheating the
    bank out of interest they would have been earning, had not your
    check been processed.
    
    But to get back at the pretext of this argument, IT IS NOT NECESSARY
    FOR A 10 DAY HOLD ON A "NOW".  The only float (of bank's $$) is
    when the they lose $$ for a NOW that is returned thru the system.
    Then they most certainly will charge the consumer for the error,
    if it isn't their's ;^).  Now I'm now expert on how long it takes
    a Bank's (DCU for example) Computer Dept. to settle their subscribers'
    accounts; but 10 business days from the time of first reaching the ACH 
    till bank reconcilliation???  No Way, Jose!

    I'll claim a 99.3% accuracy on the above statements -- any former
    bankers in the audience??
    
    Jp
    

re:    < Note 121.19 by LAIDBK::PFLUEGER "Marketing Dir; Bimbleman's Light" >
    
   > The Bankers' concern is is that they are temporarily out xxx million 
   > dollars [no longer earning interest at the FED], while a percentage of 
   > these instrument of withdrawal [checks] are worthless!  Therefore,
   > that's why you see a penalty for a bad check - you cheating the
   > bank out of interest they would have been earning, had not your
   > check been processed.
    
    Minor nits: The Fed doesn't pay interest on member's deposits. Any
    "excess reserves" a bank might have can be loaned out overnight to
    other member banks, at the Federal Funds rate. Alternatively, banks can
    purchase Treasury securities from the Fed; in this case it's the U.S.
    Treasury that pays the interest.
    
    The fees for returned checks have very little to do with the amount
    of lost interest. How many banks have a sliding scale for this fee? 
    
    
    
    
    

From:	CSC32::ROBBINS "An optimist is someone who tells you to cheer up when things are going his way  17-Oct-1988 1038" 17-OCT-1988 11:44
To:	@SOCIAL
Subj:	Information about DCU's holding of checks

I've discovered some information that I thought I would pass along.

When I went to deposit a check at DCU they told me they wouldn't
cash or deposit it without holding it for 3 days. I've deposited many
checks before and they never held them if they were under $500.
When a check is held, no money may be withdrawn against it, and no checks
will be cleared against it. When I asked what was going on they told me that
new federal regulations REQUIRED them to do this.  I got a bit irrate and
talked with supervisors and was again told that the new check clearing
regulations REQUIRED them to hold all checks over $100 for a minumum of 3
days, regardless of the balance in your account.

Well... to make a long story shorter... I called DCU's main office
and got the same story, so I called the Federal Reserve Board and got a
copy of the regulation. It DOES NOT REQUIRE any minimum holding period.  It
specifies a maximum holding period but leaves to each financial
institution's discretion whether checks will be held or not.  After calling
DCU President's Office and talking with the person who wrote the DCU
policy, she finally admitted to me that it was a POLICY of DCU and not a
regulation. She said that they decided to implement this new policy and
in-effect blame it on new federal regulations.  This policy protects DCU
at the expense of their customer's and was in no way required by the
governement.

Just thought I'd pass this along so that if they give you the same
"line" you'll know that they're full-of-it and if enough folks
make noise or choose to bank elsewhere, perhaps DCU will get the
message that unwarrented holding of local checks is not acceptable.

- Jeff

	Thanks for that information. I was very surprised that the new
legislation was intended to make things better and indeed made things worse
(at DCU anyway). This makes much more sense. I find DCU's new policy abhorrent
in light of this information.

Chuck

Just saw that someone posted the mail I sent out about this.  Thanks.

There are many banks which have chosen not to implement check holds.  The
federal regulation states a maximum for each type of check.  DCU has chosen
to reduce any risk they might have (eliminate it, actually), by implementing
the maximum holding periods.  What this says is that DCU doesn't trust it's
members and is hiding behind the new regulations.

RE: A few back about where to ***CASH*** a check???

In the Colo. Spgs. area, there is a S&L located 1/4 mile from CXO (Otero)
which doesn't hold ANY checks, regardless of amount or type, if you have an 
account.  Otero also provides free checking and free Cirrus card use.  This
isn't intended to be an advertisement, but I wanted to point out that DCU
has made a decision to be non-competitive (in several areas) and I don't
think it really serves the interests of it's members well.

- Jeff

  You might want to consider using baybanks.  They have a much better policy,
if you use the atm you are garanteed to get access to your funds in 24hrs.
Plus your interest on your now account gets credited montly.  If your account
goes below the minium 1000 required, you still earn interest, but you get the
$2.50 monthly charge.


Reggie

    There's something else you can't do with your money while it's on 3-day
    hold - move it around. I deposited a check into RSVP last Thursday with
    the intention of moving it to checking on Monday to cover my EFT for my
    mortgage payment later in the week. The reason for moving it early is
    to get my 3rd transfer from RSVP to checking done in October rather
    than use up one from Nov. It went into RSVP in the first place to get
    the extra piddle of interest for a few days. Dumb, I know, but it's the
    "principle" of the thing. Anyway, to conclude a long story, I know I
    can't get the money out for 3 business days but was sort of surprised
    to find I also can't move it from account to account. DCU's software
    correctly shows a balance of $X with $X-400 available (therefore the
    rest on hold), but I was told it's unable to move that $400 to another
    account and keep track of the hold. I suppose in retrospect that makes
    some sense but it'd be nice if it was possible to do.
    
    		See you in line tomorrow morning at the teller windows,
    							Trace

>    Whoa!  I think you're misinterpreting the effect of a hold.  They
>    don't get the float.  The amount you deposit is credited to your
>    account when you make the deposit, and you start earning interest
>    on it from that day. 

Just to let you know, this is not necessarily true.  I'm not sure what
DCU's policy is since I haven't seen it published anywhere, but the
federal regulation says:

"The Act requires that a bank begin to accrue interest on interest-bearing
accounts not later than the day it receives provisional credit on the
funds deposited.  To facilitate compliance with this requirement, the
final regulation permits a bank to begin accruing interest on check
deposits based on the average availability the bank receives on such
deposits on a bank-wide basis.  (229.14(a).)"

As far as I can tell, and assuming DCU has adopted the "average
availability" as the same period as the holds, DCU's new hold policy has
both inconvienced it's customers (who they obviously don't trust) and given
them a new opportunity to get the float on these deposits!

- Jeff

    I was never too concerned about a check-hold policy, until it just
    happened to me....
    
    I deposited a check from a life insurance company.  This is a major
    company, not some remote personal check.  Since the company is
    out-of-state, DCU put a 5 BUSINESS DAY HOLD on the deposit - in
    effect, a one week hold - my receipt says the funds will be available
    next Tuesday.
    
    Now, maybe there's some logic behind holding an out-of-state personal
    check, but a corporate check for a few hundred dollars?  I really
    don't think it's necessary.  The tellers and branch manager insisted
    that they were required to hold the check due to the new federal
    regulations, but I can't fault them since that's probably what they
    were told.  A call to DCU headquarters confirmed that this is the
    banks policy to safeguard against bounced checks.
    
    So, what can we do?  DCU employees are just following the policy, and
    are powerless to do anything about it.  How do we communicate to the
    policy-makers that the members view this new policy as obstructive and
    unnecessary?  After all, as members, isn't the bank's risk OUR risk?
    
    As much as I'd like to, I doubt that I'll dump DCU and switch to
    another bank.  It's just too convenient.  But it seems that DCU
    tries hard to make it difficult to do business with them.

    -db    

		I'm just curious.  Has anybody gone to other banks/
Credit Unions and actually deposited checks from out of state?


If you have and not run into the problems that you are running into at
DCU then we should start jumping all over them.  If you have gotten 
the same kind of response, I think it's time to start looking at who
passed this law, not the people who have to be stuck in the middle.

It is a bank's discretion if they want to hold checks or not.  It is not
required by law to hold checks.  The law simply limits the amount of time
they can hold a check if they decide to.  The law also says they have to
have a non-discriminatory policy of deciding which checks to hold.


>		I'm just curious.  Has anybody gone to other banks/
> Credit Unions and actually deposited checks from out of state?

Yes, I have.  My local bank doesn't hold *any* kind of checks regardless of
amount or where it's drawn from.


> If you have and not run into the problems that you are running into at
> DCU then we should start jumping all over them.

Yup, that's the idea!!!  The real thing that irks me about the situation is
that DCU is blaming the law when in fact it is their decision to impose
holds.  Heh, DCU... How about taking responsibility for your decisions and
not trying to blame it on someone else????  I guess they figure their
customers aren't smart enough to figure out their game. 

- Jeff

    This is an official response by Mary Madden of the DCU. The portion of
    that response, dated 02-NOV-1988, that applies to this note topic is
    included below. See note 2.22 for more information. 
    
    Whether you agree or disagree with the response from the DCU, please
    either direct your comments to the DCU directly (dtn-223-6735) or
    post your comments as a REPLY to this entry in this conference.
    
    Carl Leeber
******************************************************************************
    Federal Regulation CC, enacted by Congress, requires all financial
    institutions to publicly disclose their hold policies.  This law also
    states that a financial institution cannot discriminate one member from
    another.  For example, if we hold one member's check over $100 we must
    do the same for all other members presenting a check for over $100.
    The major difference is DCU's loss of discretionary judgment based on a
    member's financial situation or past history with the credit union. 

    Under Massachusetts law, check holds cannot exceed 3 days for local
    checks and 5 days for out of state checks.  DCU's Funds Availability
    Policy is well within these guidelines.  Our hold policy is intended to
    protect DCU and its membership from bad check write-offs.  Bad check
    write-offs increase our operating costs which affects other products
    and services we offer our members. 

    When we institute a check hold, we are holding the funds on deposit
    until the check clears.  Members earn interest from the day the check
    is deposited.
    ******************************************************************************

I'm glad to hear some reaction about this topic.

However, the argument wasn't whether it was legal or whether or not DCU had
publicized the actual new policy. We want some justification that the loss for
bad checks is enough to warrant the major inconvenience for most members. Why
has DCU suddenly decided to do this when other banks still don't have hold
policies? And, why had DCU chosen to hide behind the new federal regulations
to justify the new hold policy (rather than stating it was to reduce the
amount of loss due to bad checks and to try keep the other rates competitive).

Perhaps I'll call her. Thanks for posting the phone #.

Thanks,
Chuck

    .30 is typical of all of DCU's responses in this file. They remind
    me of what Woodward & Bernstein called "the non-denial denial" when
    describing public statements from Nixon administration officials
    during the Watergate era.
                                                                  
    FWIW:
    I checked with my other credit union (the one I went back to after
    I got disgusted with DCU's policies and attitudes). Regulation CC
    had _no_ impact on their check-cashing or check-hold policies. (Cash
    up to $3000 personal check; no holds on any deposited check.) 
    
    Thank you, Jeff, for exposing this fraud that DCU has perpetrated
    on its membership.                                          
    
    DCU's policies used to just annoy me; now they anger me.

Dear DCU and Ms. Madden,

I'm sick and tired of lies, deceiving remarks, and hiding behind false
claims of federal regulation. Your statements about discretionary holds are
simply untrue based on the information I have.  Please be straight with us
about this and stop making false statements.  If my information is incorrect
or inaccurate, please point me to where in the federal regulation this
requirement appears. 

In particular, DCU's response (.30):

>    For example, if we hold one member's check over $100 we must
>    do the same for all other members presenting a check for over $100.
>    The major difference is DCU's loss of discretionary judgment based on a
>    member's financial situation or past history with the credit union. 

The information I have excerpted for this note was printed in the
following document:

"Special Notice - Board of Governors of the Federal Reserve
System, Memo dated: June, 1988, To: Member Banks of the Federal Reserve
System and other Financial Institutions, Subj: Compliance with the
Expidited Funds Availability Act and Regulation CC".

In this document it points out many times that discretionary hold policies
are acceptable and in no way prohibited.  For some examples:

pg 2: "If you have a policy of delaying only on a case-by-case basis - for
example, you usually give next-day availability but do place a hold on
deposits from time to time - you must make sure, when you do hold funds,
that you still provide availability as required by the law."

pg 5: "...If you impose case-by-case or exception holds, you must generally
give the customer a notice at the time the deposit is made.  The notice
may be given later in three situations:

	1. if the deposit is not made in pseron to an employee of your
	   institution;

	2. if the decision to place a case-by-case hold is made after the
	   deposit was made (for example, if it's made by the teller's
	   supervisor after the customer has left the branch); or

	3. if you learn of facts that give rise to an exception hold
	   after the deposit was made."

Further it goes on to list "exception holds" which can be imposed
on a case-by-case basis.  It describes a process where a bank normally
holds no checks, but invokes the exception process for specific reasons:

Attachment A: "...There are exceptions for:

	o New accounts (less than 30 days old)
	o Large deposits (over $5000)
	o Accounts that have been repeatedly overdrawn
	o Deposited checks that have previously been returned
	o Checks that the bank has reason to beleive are uncollectible"

Lastly, the document includes a sample disclosure statement which banks
may use to inform its customers (under the regulations) that it will use
case-by-case holds.   This statement is reproduced in Attachment B of
the document and titled "Specific policy disclosure for next-day availability,
case-by-case holds to statutory limits under the temporary shcedule, and
section 229.13 exceptions (Form C-3)"

Attachment B: "Our policy is to make funds from your deposit available to
you on the first business day after the day we receive your deposit.  At
that time, you can withdraw the funds in cash and we will use the funds to
pay checks that you have written.

...In addition, funds you deposit by check may be delayed for a longer
period under the following circumstances: 

	o  We believe a check you deposit will not be paid.
	o  You deposit checks totaling more than $5000 on any one day.
	o  You redeposit a check that has been returned unpaid.
	o  You have overdrawn your account repeatedly in the last 6 months.
	o  There is an emergency, such as failure of communications or
	   computer equipment."

Lastly, in the section entitled "Complying with the Availability Schedules":

pg 3: "...Of course, one option is to change your availability policy to
one of immediate or next-day availability with holds placed only on a
case-by-case basis and/or and exception basis."

As you can see this document clearly demonstrates that financial institutions
can implement case-by-case holds and use discretion to determine which
checks to hold, in particular "past history with the credit union."

So.... DCU, I am anxiously awaiting your response.

- Jeff

I'm sure DCU takes their cue from their legal staff.
Sounds like they could do a better job on their homework.

They could do a much better job.  In fact, today I noticed a large new sign
in the DCU branch (CXO).  It says quite plainly across the top
FEDERAL REGULATIONS and then goes on to state DCU's availability
policy.  It also states DCU's maximum cash per withdrawal, and maximum transfers
from savings to cover bounced checks.  This sign leads you to believe that
all of this is based on federal regulations.  Quite misleading....

- Jeff

    DCU's misrepresentation of Regulation CC finally bit me, too.  I
    deposited a $190 bank check drawn on a New York bank which manages
    several tax-free unit trusts and got the full 5 work day hold.
    
    Assuming the teller has herself been misled, I expressed the fact that
    the new federal regulations were intended to make funds available
    SOONER rather than LATER.  She jumped to DCU's defense, saying that DCU
    had a more generous policy than ANY of the local banks.  I disputed
    that, noting that BayBank makes the first $5000 available the NEXT DAY.
    (I visited BayBank moments later and confirmed that, with the short
    list of exceptions given in Regulation CC, funds ARE fully available
    the next day.  The only clinker is that BayBank doesn't start paying
    interest until the next day, either.) 
    
    At this point, it appears that the tellers aren't the na�ve pawns of
    DCU management that I was willing to believe they were.  There's
    something seriously wrong when an institution to which we have
    entrusted our money is unable to be honest with us.  I want to use and
    support my credit union, but I'm rapidly reaching the point where I can
    no longer tolerate its unconscionable ways. 

    
    My wife and I needed to borrow $300 from our Household Finance write
    yourself a loan type account and we needed the money by today, so
    instead of writing out one check for $300 which DCU would have held
    for five days we wrote three seperate $100 checks and deposited
    one on monday then one on tuesday and finally the final one today.
    
    So instead of needing to wait until next monday for the money we
    now have it available now when we needed it. It would have been
    nicer to have been able to write just one check but DCU wants to
    play their games with our money so we decided to play their game
    and at least we saved three days in getting our money!

The new banking legislation requires the banks to play by the same
rules for ALL their depositors, or be subject to discrimination
suits.  It appears that DCU decided on a very simple set of rules:
Hold all checks.  They could have chosen rules like: Hold all personal
checks, hold all checks for people who have a history of depositing
bad checks, hold all checks EXCEPT those cut by major corporations,
financial institutions, etc.  

Their current set of rules is optimized to protect the financial 
position of DCU.

I think DCU should make the extra effort to define a more thoughtful 
set of rules that still protect the institution, but also provide for 
customer satisfaction (see note 141).
/j

    I use the DCU for two things, one savings that I can't get at too
    easily and a checking account to pay my mortgage. The mortgage is with
    a local New Jersey/New York bank, Anchor Bank. Their procedures made
    DCU look exceptionally good. They lived up to their name and really
    stuck in the mud. So we decided that they deserve to have an out of
    state check for the payments. The rest of my banking is done with
    MidLantic Bank, a commercial bank. They were good at making funds
    available the same day as the current business day (it becomes the next
    business day at 14:00). They too have done the same thing that DCU did.
    We are now waiting for the full maximum hold allowed by law. 
    
    I once did business with another commercial bank here in New Jersey,
    The Trust Company, "The bank with a heart" (logo show two overlapping
    purple hearts). They were going to sit on a pay check for five days
    (this was about two and a half years ago) and leave me with no money
    (they should have used black hearts). I already had the MidLantic
    account but they were not open that night. I told the teller to give me
    the check back and that I will go the next morning to MidLantic and
    have it cashed on the spot. 
    
    With TAX time coming soon, the Trust Company would also sit on Federal
    Tax returns for five days, they were not drawn on a local bank, the
    Federal Reserve does not have an office in New Jersey. The question
    is, "Will the DCU also sit on the tax returns for the maximum hold
    period?"
                                

    I have been depositing (on occasion) my wife's payroll check into
    my DCU account for the last five years without ever having a *HOLD*
    placed on it until now. The bank where we have a joint account doesn't
    place any *HOLDS* on any checks, the funds are available the same
    day. Normally when I deposit my wife check it is to cover paying
    the monthly bills..Three day holds on payroll checks doesn't make
    it for me..........DCU is becoming a pain to do business with. Even
    if I deposit a my own personal check drawn on my account with my
    local bank it has a hold placed on it, yet I can walk into that
    bank and cash a DCU check without any problem...sorry but I don't
    believe the law was passed to make it more difficult for us to conduct
    business with financial institutions.

	I have some comments relating to this discussion. I use DCU for 
direct deposit and therefore to pay my bills. I keep a list of when I send 
the bill out, when the vendor posts it, and when it is posted against DCU. 

	I live in NJ. Any check that I give to a NJ bank for credit card or
my second mortgage is posted to my DCU the day after the posting to the
account. The worse case I have seen is my payment to Shell in Oklahoma where
it takes 2 days from the vendor posting to appear on my DCU statement. 

	I use these examples to show that the 5-day hold period DCU may 
be very excessive giving current check clearing technology. I have recently 
deposited some money from my NJ ready equity account which they put a five 
day hold on. When I receive my next statement from them, I am going to see 
when it was posted to the Ready Equity and see how it compares to the five 
day hold. 

	I believe this is one way of determing whether the hold period is 
excessive. I will let you know.

    I've been depositing my wife's paycheck into our DCU savings account,
    and I don't think that they've been putting a hold on these
    (out-of-state) checks.  How do you know if the check has a hold
    on it?  Is it marked on the deposit slip?

	> Is it marked on the deposit slip?


	Yes, it is.

Payroll checks that are marked as such, come from a corporation ("Inc"
or "Corporation" in the payor name helps, as does showing the paystub)

are not supposed to be held as per DCU rules.

if they do this to you - talk to the branch manager

    DCU makes NINE (9) different types of checks IMMEDIATELY PAYABLE!
    Other types of checks are payoutable in an amount of time that is
    proportional to the ability of the federal reserve banking system's
    ability to tell DCU if the check will clear. 
    
    The  (actually 13) types payable immediately are
    	cashier's, certified, treasurer's checks
    	checks drawn on DCU
    	checks for $100 or less up to $100 daily per maker
    	corporate payroll checks
    	DIGITAL equipment corporation checks 
    	Federal, State, and Local govt. checks
    	Money orders
    	Traveler's checks
    	Wire Transfers [Can someone post the ID of the transfer bank?]
    
    NEXT day for first $100 of a  check on a local bank
    THIRD day for the rest of a local check
    FIFTH day for non-local checks          
    
    In light of these facts, I find the preceding complaints w/o-merit.
    
    	Rick
    	Merrill
    

    Re .46:
    
    I'm willing to grant that DCU's policy on immediately payable checks is
    acceptable.  The problem is that ALL OTHER CHECKS over $100 suffer an
    UNNECESSARY HOLD of 3-5 business day (up to 7 calendar days).  This
    includes checks from insurance companies, investments, and other
    (non-payroll) corporate accounts which people may well need to meet
    current expenses.  Formerly, such checks were NOT HELD unless they
    exceeded $500 (and exceptions could be made, even then). 
    
    DCU has flagrantly ignored the INTENT of the new regulations, which is
    to make funds available SOONER than they had been.  The regulations are
    predicated upon the improved efficiency of the Federal Reserve and its
    clearinghouse operations in clearing checks.  DCU went OUT OF ITS WAY
    to create a more restrictive set of rules than those offered in the
    regulation as a model (and adopted verbatim by BayBank, among others).
                         
    In short, DCU is not dealing with its members in good faith.  DCU has
    chosen to hide behind the regulations and adopt the MAXIMUM hold
    periods allowable under them.  They've compounded this bad faith by
    claiming the federal regulations "require" them to hold all these
    categories of checks for such long periods.  That's simply NOT TRUE,
    and is easily be disproved by comparing the hold policies from multiple
    savings institutions.

re:    < Note 121.46 by REGENT::MERRILL "Glyph it up!" >
    
   > In light of these facts, I find the preceding complaints w/o-merit.
    
    Sounds like a judicial pronouncement...
    
    One omitted fact: DCU lied to the membership in blaming Regulation
    CC for this new policy. So they're at least guilty of perjury.

RE: .36

> In fact, today I noticed a large new sign
> in the DCU branch (CXO).  It says quite plainly across the top
> FEDERAL REGULATIONS and then goes on to state DCU's availability
> policy.

I was there yesterday and it's gone....

- Jeff

Well... I figured I'd drop by this notesfile and see if I wanted to join
the DCU.  With customer satisfaction like this, I think I'll pass.

Bob

    
    I recently received a "DCU's Funds Availability" newsletter with
    my statement. The first sentence is:
    
    	"Our policy is to delay the availability of funds that
    	 you deposit in your account. During the delay, you may
    	 not withdraw the funds in cash and we will not use the
    	 funds to pay checks that you have written."
    
    It then goes on to say which checks have same day availability etc.
    They're finally being truthful but it doesn't make me feel very
    good about DCU's customer orientation. I've been avoiding banks
    for years due to this kind of BS.
    

    	Their policy truly is to delay the availability of funds.
    I just tried to cash a $56.70 check from my mortgage company
    and it's being held until Nov. 28 ( yes,Nov. 28, 10 days !). 
    Who said their hold policy was draconian ?
    I had to deposit the check then fill out a sharedraft withdrawal 
    to get the money.
    
    Mike

    Did they explain why they put the hold on for so long?  I thought
    the maximum hold was 5 working days, which at most could be 7 calendar
    days.
    
    Ed..
    

    Thanksgiving holiday - 2 days - occurs next week.  That could be
    the reason.
    
    /Ed

    A banker friend of mine told me this weekend that the federal hold
    policy that just went into effect is just for deposits into checking
    accounts.  Holds on deposits into savings accounts can be for a
    LONGER period of time.  Anyone else heard this?  Note: I may have the
    savings and checking accounts reversed!  Maybe that explains the
    extended hold?
    
    Don

Based on the info I've gotten from the Federal Reserve, this isn't so.  The
holds do not depend on the type of account the checks are being deposited to.

- Jeff

I've been a member of DCU since the start and the recent hold policies and the 
way they were implemented is deplorable. I plan to call DCU and register a 
verbal complaint and encourage all other DCU members to do so.

The way DCU is working seems to to be quite contrary to the ethics and ideals 
that credit unions are based on. Deception and hassles are not what makes for 
a effective and respected service organization. I certainly dont feel like a 
MEMBER of a Credit UNION; I feel more like a peon customer with no say in what 
inane policies are put into place.

Jim

I was in the DCU yesterday and overheard a teller telling a customer that
they couldn't deposit a check written to their child in their account
because of regulation CC!!!!

- Jeff

    re: .60 Isn't it common sense that you cannot deposit a check made
    to someone else in YOUR account?  How is a teller supposed to know
    if you are still legally the child's guardian or whatever? If the
    child is a minor, one *could* get a power of attorney, BUT ... 
    
    	Rick
    	Merrill
    

I sign checks for my daughter all the time and deposit them
in DCU as well as other banks.  The difference is I don't say anything
about it, I just do it.  Also in the case I was eavesdropping on (not
very polite, I admit), the child was standing there with their mother
and was obviously a minor.  Lastly, you don't need a power of attorney
to sign for your minor child.

- Jeff

    re: .62 - You may indeed get away with it at banks that are familiar
    with you, but you'll have to quote some authority to convince me
    - I have five children for a total of 63 kid-years :-) and experience
    with every kind of checks and accounts for minors.  YOU are NOT
    legaly entitled to cash checks made out to someone else - deposit,
    yes; cash, no.
                                                                   
    	Rick
    	Merrill

    
    	I frequently deposit large checks at DCU and rarely, if ever,
    	have them held.  The funds are available to my checkbook
    	immediately.
    
    	How do I do it?  I use the checks to make payments to my CRT
    	account.  Checks used to make loan payments have no holds. 
    	I usually have a balance in my CRT account (isn't living on
    	the margin fun?).  I questioned the teller on this, and she
    	said that if the check bounces, then it is my problem, and they
    	simply readjust the balance on the loan.
    
    	My checking account balance is at zero as long as there is a
    	CRT balance.  Each check I write is immediately funded or covered
    	by my CRT account.  Therefore the money deposited as personal
    	checks is immediately available to my checking account.  No
    	holds!  No fuss!
    
    	OK, so you say that you don't usually have a CRT balance.  Assuming
    	that you have a CRT account, and assuming that you are really
    	desperate for your check-deposited funds immediately, why not
    	try this:
    
    	Transfer from your CRT account into your checking account an
    	amount equal to the check(s) you want to cash.  I'm not a DEC
    	ATM user, so I do not know if you can do this at an ATM.  If
    	you do it at a teller, you will probably have to make your check
    	deposit at another teller.  The hold is placed by the teller,
    	and if you do all of these transactions at the same teller,
    	she will certainly catch on, and will not allow it.  Once the
    	funds are transferred, make your deposit (pay off your CRT loan).
    	The teller will see that you have a CRT balance (if you tell
    	her that you are paying off your CRT loan), and will not mark
    	the check(s) as requiring a hold.  She doesn't know why there
    	is a balance, only that you have a balance.  
    
    	Alot of work, I guess, which is why I qualified a reason to
    	do this as being desperate for your money.  Even if DCU hadn't
    	changed their hold policies, checks of $500 or more were held.
    	Just today I deposited over $700 in checks (one check was $650)
    	and nothing was held.
    
	Joe Oppelt	

    I like it!  I amsure DCU will change this and say the Fed told them to.
    
    	- mark

    	What's a few hours on hold...here they hold checks up to 10
    working days before allowing withdrawal!!  
    
    	DCU IS GREAT!!  KEEP UP THE GOOD WORK!!  
    
    Keith

.66> What's a few hours on hold...here they hold checks up to 10
.66> working days before allowing withdrawal!!  
     
    Two questions: who holds checks for just a few hours and where is
    "here" that they hold checks up to 10 working days? 
    
.66> DCU IS GREAT!!  KEEP UP THE GOOD WORK!!  
    
    Yea right. And I've got a bridge to sell you.
    
    -Glenn-

    	I have been a member of DCU since it first started.
    	It has now become a business that is painful and down right
    aggravating to work with.
    	Their check holding policy is unacceptable and costly.  I have
    never bounced a check until this policy came into "THEIR WORLD".
    Other banks that I do business with are not playing this game.
    	The bottom line is that as of the new year I will discontinue
    doing business with this organization.  I will also no longer lose
    sleep wondering when a check may clear.
    
    	Happy New Year.
    
    	Ken E. Bernier

    Well, there is no hold on U.S. Savings bonds - cause DCU won't cash 'em!
    
    That's right!  I just went to a branch of the Digital Employees'
    FEDERAL Credit Union and asked to cash a United States Savings Bond
    with a face value of $100.
    
    I was told that DCU doesn't "do" bonds.
    
    Maybe the "Federal" refers to some other government?  Perhaps it was
    mispelled on my check and should read Federale?
    
    There's probably some legislation or something that permits this, but
    its hard to imagine a federally-backed institution that won't cash
    U.S. savings bonds.
    
    Jeez!
    
    Jim
    

As far as I know the only banks allowed to redeem US Savings Bonds are ones 
authorized to by the goverment, not just any bank that sells bonds.  I 
think that this is clearly documented on the bond.  Maybe someone could 
check this as all my bonds are tucked away in a sef deposit box.

Jilly

    I don't have a complete definition of all the different type of
    "banks" but a couple of years ago I had a similar experience.  Actually
    the DCU was helpful and told me that only COMMERCIAL SAVINGS BANKS
    (maybe others too but I'm not sure) can cash bonds.  There are plenty
    of those around; Baybanks, Shawmut, etc.  and you don't have to
    have an account at one of these banks to cash the bond.
    

    "TERMS AND CONDITIONS/PAYMENT INFORMATION: Department of the Treasury
    Circulars, Publid Debt Series Nos. 1-80 and 3-80, contain the terms
    and conditions governing this bond.  THIS BOND IS NOT TRANSFERABLE
    AND MAY NOT BE USED FOR COLLATERAL.  It may be paid 6 months after
    its issue date, upon proper identification and request, by any
    financial institution qualified as a paying agent.  The bond may
    also be paid by a Federal Reserve Bank or Branch or the Bureau of
    the Public Depbt, Parkersburg, WV 26106-1328."
    
    The relevant phrase here is "any financial institution qualified
    as a paying agent".  Obviously the DCU ain't one of these ...
    
    - Chris
    

    

    A branch manager from Bank of New England just told me recently
    that local checks (including personal checks) deposited into 
    PERSONAL accounts in Bank of NE are put on hold for 1 business day, 
    regardless of the amount of deposit.  The manager said that this is 
    the MAXIMUM hold period in FDIC insured banks on PERSONAL accounts.
    The hold for 5 days or more are only for non-personal accounts.  
    
    The rules for other types of banks (e.g. FSLIC, non-ferderal chartered
    banks) or credit unions are different.  Anyone knows what they are?

According to the information I've got, this sounds like a policy and not
part of the federal regulation.  The federal regulation (which I've got
a copy of) applies to all finiancial institutions and makes no difference
what type or type of account.  The regulation allows banks to make local
policies of the sort you mention, as long as it doesn't exceed to maximum
allowable holding periods.

- Jeff

    A neighbor of ours is having BIG problems with First Service Bank
    in Leominster, where she and her husband have been banking for years.
    It seems First Service kept bouncing checks even thought she and
    her husband kept putting in his paycheck and budgeting closely 
    so she KNEW they were not in the red.
    
    So her husband goes to the bank and finds out they have been putting
    a 7-day hold on his paycheck (from a N.H. School System)!  The hold
    was the cause of the bounced checks!!!
    
    To counter the hold, the husband CASHES his paycheck at a N.H. bank
    and then deposits the CASH into First Service.  The result, more
    bounced checks!!!
    
    It turns out First Service is holding CASH deposits for 2 days before
    allowing my neighbor and her husband access to their money!!!!
    
    We and others are telling our neighbor she and her husband are getting
    ripped off!!!  I quit using another bank in another state and went
    to the DCU because of similar (but MUCH shorter) holds.  
    
    Frankly, when I remember my experiences and see what my neighbor
    is going through, DCU's policy does not seem bad at all!

    Re .75:
    
    I'm sorry to see that there are places whose implementation of the
    new federal rules are even sleazier than DCU's.  By no means does
    this excuse DCU for its shameful lack of honesty in explaining the
    changes to its membership.

       First Service Bank is in BIGTIME financial trouble. I'm not sure
    of all the details, but I believe one or more of their officers
    may have run afoul of the law.
                                         Denny

    
    DCU told me they'd have to hold a government check (tax return)
    to my wife that I deposited into my account.  The teller said it
    was only because it was a second party check.  We both have DCU
    accounts, but I needed the cash in mine.  
    
    Okay, a rule is a rule, but a government check?  And, geez, I could 
    have had her deposit it in her DCU account, take out cash, give it to me, 
    then deposit it in mine with no holds anywhere, but that would have been a
    major hassle.  I dunno, I used to get banks to cash my Syracuse
    University checks when I didn't have ANY account there.  They just
    trusted that SU would pay up.  Maybe schools are more solvent than
    governments these days :^)
    
- Sean

    .75
    First Federal in Leominster went out of business... taken over by
    another institution. Their CD's are paying 10% simple interest per
    year for a minimum of $1000.00 for 3 months.

    
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AT PRESS TIME
Credit Union Times, February 5, 1997
----------------------------------------------------------------------

.
.
.

HILL TO FOCUS ON FOM ISSUE

   WASHINGTON, D.C.-Both the House and Senate are planning to hold
hearings on the credit union field-of-membership issue, according to
the Credit Union National Association.

   CUNA reported that the House financial institutions subcommittee,
chaired by Rep. Marge Roukema (R-N.J.), may hold hearings the week of
Feb. 24, the same week of CUNA's Governmental Affairs Conference in
Washington, D.C.

   The trade group further reported that Sen. Lauch Faircloth (R-N.C),
who is slated to become chairman of the Senate financial institutions
subcommittee, is planning to hold hearings on the credit union FOM
issue.

   In a recent issue of American Banker, Rep. Jim Leach, who chairs
the House Banking Committee, predicted that credit union expansion
will be the most controversial financial services issue this year. He
told the newspaper he would hold hearings "with an open mind to all
parties."

   Both CUNA and NAFCU are rallying support for the "Credit Union
Membership Access Act." The bill, designed to clarify the Federal
Credit Union Act and reaffirm FCUs' right to serve multi-occupational
groups, has not yet been introduced in Congress.
.
.
.
    

    Further to my letter regarding the FOM issue to Senator John Kerry 
    of Massachusetts, I got a form response from him in the mail. 
    He says he is a member of the Senate Banking Committee 
    and has promised to "look carefully into the matter".
    
    As yet, there has been no response from the other Senator and 
    my local Representative in the House.
    
    - Ganesh.

The Supreme Court, on January 24, 1997, agreed to review the field-of-membership
restrictions on credit unions.