Conference 7.286::dcu

    Re .0:
    
>   The check holding policy is being reviewed and will be changing within
>   the next six months.  I talked to Mary Madden and mentioned this to me.
    
    That's good news.  The current policy (and all the misrepresentations
    that surrounded its introduction) is unacceptable and has made it easy
    for me to justify doing the bulk of my banking at BayBank.
    
>   If you have suggestions regarding the check holding policy, I suggest
>   that you give her a call.
    
    Perhaps we could collect a bunch of suggestions here and pass them to
    Mary Madden et al in a single chunk.  Here are a few for openers.
    
    1.	Make ALL FUNDS (with a short list of exceptions, and up to a
    generous amount such as $5000) available the BUSINESS DAY FOLLOWING the
    deposit.  That's the model that was given to each financial institution
    when the rules were changed and that's what BayBank implemented. 
    Anything less is uncompetitive.  The exceptions listed in the model
    (and adopted by BayBank) are such things as checks drawn on banks
    outside the U.S. and those that the financial institution has a bona
    fide reason to suspect are uncollectable.
    
    2.	Raise the limit on the amount of cash (other than the current list
    of instruments that DCU will cash in their entirety) that's immediately
    available.  $100 doesn't go as far as it once did.
    
    3.	Evaluate the policy with respect to REAL EXPERIENCE.  DCU handles
    enough deposits that it should be able to predict with reasonable
    certainty the number and size of the bad checks it receives.  I would
    certainly HOPE that the bulk of the membership isn't unduly burdened by
    what I assume is a very small number of bum deposits.
    
    4.	Be more public about the decision-making process.  Too much happens
    in "back rooms" and is simply sprung upon the DCU membership.  If
    increased costs justify increased fees, spell it out.  If, as in #3,
    experience shows that DCU needs the full 5 working days before it can
    make funds available following a deposit of an out-of-state check, then
    show us that, too.
    
    5.	The Board of Directors, as DCU's policy-making body, should have
    established (subject to the by-laws and NCUA regulation) the acceptable
    levels of risk (which translate into cost factors) for various types of
    transactions.  When a new fee structure is proposed, its revenues
    should be compared to the anticipated costs.  If a large disparity
    exists, then something is out of line.
    
    DCU is incorporated as a not-for-profit corporation, which means it is
    entitled to hold back part of its working margin against future
    requirements, but it is NOT entitled to enrich itself.  Unless the BOD
    has specifically moved to have the profits from certain types of
    transactions subsidize others, the margins for ALL transaction types
    should remain low enough to cover only the risk involved in each.
    
>   It sounds like they will be raising the limit for checks from a Inc.
>   etc...
    
    A good start.  Let's see how the follow-through is.

    I seem to be in a minority in this file in that, overall, I think the 
    DCU does a very good job. However, I will admit that the check 
    holding policy has frosted me since they started it.
    
    I have had several instances where I have deposited a large check
    from another bank, the check has cleared in less than a day (as
    shown by the fact that the funds in the other bank were reduced
    by the amount of the check), yet I still was forced to wait
    4 more days before the funds became available to me. I don't
    like the idea that my money is not available to me when the 
    DCU already has it. Seems to me they could figure out a way
    to automatically remove the hold once the check has cleared.
    
    						Mark
    

    Then DCU could not "Play the Float" with your money, earning interest
    on it while it is unavailable for your use.  There is no excuse
    for DCUs check holding policy, other than it's in their best interest
    to have funds available to them at no cost.  
    
    Remember, if we did it, it would be called "Check Kiting", which
    is a felony and DCU would be first in line to initiate charges.
     
    Its a no win situation for us; DCU continues to hide behind the
    letter of the law, as opposed to being responsible to its membership.
    
    Jay
    

    
    That's the funny thing about the letter from the law. I checked
    with Baybank couple times when I deposited checks to see how long
    is the hold, and I was told it was just one day or so but when I
    asked about the amounts of holding and federal law...they said it
    wasn't true and that law wasn't in affect.
    
    strange...maybe I misunderstood it twice...!

    Re .4:                                                           
    
    There's a full description of the federal regulation that went into
    effect last September elsewhere in this file.  There is a law behind
    it, the Federal Funds Availability Act, which was intended to make
    funds available SOONER rather than LATER now that electronic funds
    transfer between banks is the norm.
    
    The federal regulation specifies the maximum permissible hold periods
    and outlines the types of instruments (such as checks on foreign banks)
    that can be exempted from such holds.  It requires each financial
    institution to disclose its policy to its customers (as DCU did) and is
    accompanied by a generous "model policy" that was adopted almost
    verbatim by BayBank (all deposits up to $5000 are available the
    following day).  DCU chose to use the maximum hold periods for nearly
    everything, making exceptions for checks drawn on Digital Equipment
    Corp and a few no-risk instruments such as bank cashier's checks.
    
    DCU's policy DOES conform with the regulation, even though it ignores
    the intent thereof.  DCU's explanation/excuse that they were forced by
    "federal law" to adopt more restrictive hold periods is a lie.  (I've
    tried to be tactful for nearly a year about this, but I've run out of
    euphamisms.)

    
    I would like to request that DCU produce actual financial numbers which
    support their ultra-conservative check-holding policy.  If it's members
    are cashing a lot of bad checks, then the hold is warranted.  If they
    are not, then the policy should be relaxed.
    
    Come on DCU, a well run financial institution like DCU should have
    these numbers right at your fingertips!
    
    Let's apply the "cost of funds" approach to the check-hold policy...
    

	Just deposited a large check with DCU .  

	How about  a 7 WORKING DAY hold.  I'm talking
	about deposit 2-9-90 .  Availability 2-21-90.

	On a check from an insurance company.

	United Bank doesn't hold my large checks.  They're
	looking better and better.

	Steve H