Conference 7.286::dcu

    	"Hold" does not mean that you do not earn interest during the
    	time it is on hold.  It simply means that you cannot withdraw it
    	until the hold is over.  DCU makes no money because they hold
    	your check.  They simply preclude you from spending it until
    	they are sure that it has cleared.
    
    	I do agree with you however that big checks clear just as quickly
    	(slowly) as small ones.
    
    	Joe Oppelt

I've repeated this preposterous situation before, but I bank at to
institutions primarily (in Colorado Springs):

	United Bank of Garden of the Gods
	DCU

I have *never* had a check held by United Bank, including those from DCU
(regardless of size).

DCU holds all checks above $100, including those from UBGOG (except for
teller's and other official checks)

The irony is that the CXO DCU clears their checks through UBGOG.  I've seen
DCU "money pouches" on the chief teller's desk at UBGOG.

sigh.

BobW

    Interesting.  The 2 replies to my original posting.
    
    Over the weekend, I had a conversation with a friend who is a V.P. at a
    local bank.  He told me that large checks in fact clear MUCH quicker
    than small ones.  When I asked why, he told me that the clearinghouse
    under banking law must CALL the DCU to tell them if a big check has
    bounced.  Makes me feel ripped off by DCU.
    
    I know that they pay interest, etc., but that isn't the point.  It
    comes down to the principle of the issue.  Well, just another 2 cents
    worth I found to be most interesting.
    
    Andy

    $5000 is the limit above which financial institutions needn't guarantee
    3/5 business day funds availability (on local/out-of-town checks) under
    federal regulations.  DCU's policy adheres closely to the maximum
    allowable.  Other financial institutions are more generous -- e.g.
    BayBanks give next-day availability on virtually every deposit.

re .3:

>    Over the weekend, I had a conversation with a friend who is a V.P. at a
>    local bank.  He told me that large checks in fact clear MUCH quicker
>    than small ones.  When I asked why, he told me that the clearinghouse
>    under banking law must CALL the DCU to tell them if a big check has
>    bounced.

    Did he define "large checks?"  I suspect that what's a large check
    to you and me is small change to the clearinghouse.

    I'm not defending DCU's policy, but I know what their answer will be.
    They're just protecting us by being conservative.

Could I request that this policy be added to the list of things which the new
board will review?

I deposited a check for $2500.00 at the Stow DCU on Tuesday, April 28th at
8:05 a.m.. I was told that a five day hold would apply and the funds would
not be available until Tuesday May 5th, ONE WEEK LATER!

Shame on me. I assumed that what that really meant was that they would hold until
5/5 or until the check actually cleared. I checked with the bank on which the
check was written. They cleared the check and transfered the funds on Friday,
May 1st. On Monday, I attempted to use my money and was told I would have to
wait another day.

The check had cleared three days (granted, one business day) earlier, the money
was in the acccount. Why can't I use it?!?!?!?

							Mark

Because they can do that.

A while back, there was a national flap about check clearing time, with the 
result being swell new federal legislation regulating check holding times.

Before this legislation, banks just held funds for as long as they felt like.
After the legislation, banks almost always hold funds for the maximum time
allowed by the feds, just because there's a law saying they can.

Of course, I can also recall back in '84 when DCU held funds on a wire fund
transfer for two weeks.  No one could explain that to us, and DCU held fast
to their position, even though we obtained proof from the other bank that
funds had been successfully deposited to DCU.

The legislation ALLOWS the banks/financial institutions to put the holds on the
checks and sets the MAXIMUM time that they can be held.  Your friendly DCU
announced these hold times as REQUIRED by the law.

Another Example of the Communications skills and honesty.

Yes, I have on occasion written myself a check from another bank and 
deposited it in the DCU. The other bank (out of state and 500 mile 
away, no less) can sometimes transfer the funds and send me the cancelled 
check _before_ the DCU hold is lifted. Pretty clever.

(I think we still get interest on the funds while the check is clearing.
It's just that we can't use the money).


Liz

    
    RE: .6-.9
    
    Yes, this 'policy' also needs to be reviewed.  A 'hold' should never be
    longer than it takes for a check to clear.  
    
    This is another 'policy' that almost every DCU member encounters that 
    adds to the 'hassle-factor' of the place.  We have to be especially
    certain that it is doing what it is intended to do without needless
    inconveniencing and aggravating members.  Holds are justified in certain 
    cases though.
    
    So what do people consider a fair check hold policy?  I have some ideas
    but I'd like to hear yours too.

�    So what do people consider a fair check hold policy?  I have some ideas
�    but I'd like to hear yours too.
    
    As long as it takes to verify sufficient funds with a period of time
    not to exceed the federal limits.  Keep the current policy of no holds
    on items such as payroll, treasury, cashiers, etc. checks.

If you can automatically remove the hold when the money arrives, that
is the right way.  

If you cannot do that, at least require that a hold be manually removed
immediately upon request, if the money has arrived.  

	Enjoy,
	Larry

    How about determining whether any holds can be removed before
    returning a check for insufficient funds?

Re: .12

I did some banking sofware, some where in the twilight zone.

Unless the data types are real different, it is poddile to tell, easily, if
mony is in "float" (not here yet, but it's yours) or in the bank (another
position in the record).  As a matter of course, the nightly run (or whatever
is equivalent now) or the posting function could remove the hold.

A couple of lines of code at most, or is it COBOL (in which case a few
paragraphs would do).   }8-)}

Bill

I was told by DCU after depositing a check from a "questionable" source, that
even tho the check had cleared and the max hold date had passed, it was *still*
possible to bounce even, say, a month later if the check got lost in the
process someplace. I found that hard to believe but had no way to check the
info.

I can well believe that it could still bounce -- as it was explained to me,
the check cashing process has no mechanism for insuring that a check has
actually cleared, other than waiting for it to come back.  I was once told
a possibly apocryphal story about someone who printed up some special
checks for which the name of the bank did not match the bank number.  The
story went that it travelled back and forth between the bank whose name
was on the check and the bank whose number was on the check until it got
so tattered that it had to be processed by hand, and only then did anyone
realize that there was something wrong... long after the perpetrator had
removed the money and disappeared.

I had naively assumed that if a check bounces after the hold period, that
the risk belongs to the bank.  I guess that isn't true?  It seems to me
that it ought to, though -- the bank should have the onus of making sure
that the check clears in the proper amount of time, and of doing something
about it if it doesn't.  It is sure true that the customer can't.

	Enjoy,
	Larry

    
    re: .16
    
>I had naively assumed that if a check bounces after the hold period, that
>the risk belongs to the bank.  I guess that isn't true?  It seems to me
>that it ought to, though -- the bank should have the onus of making sure
>that the check clears in the proper amount of time, and of doing something
>about it if it doesn't.  It is sure true that the customer can't.

    I had a recent episode depositing a rubber check at the DCU.
    
    I deposited the check.  About a week later, I was informed by the
    source that the check had bounced at the drawing bank.  I waited for
    the funds to disappear from my account, along with the $5 charge for
    depositing a piece of rubber.  Much to my surprise, it took about a
    _MONTH_ for this to occur!
    
    I don't know where in the cycle it got held up, but I would think that
    a month would be an incredibly long time for a rubber check to be
    returned to the depositing institution.
    
    -- Russ

    The commercial banks view the interest they can make on the float as a
    legitimate form of income. Not surprisingly, enough of them got greedy
    and abused it that the regulators had to step in and set limits. So now
    the banks will tell you that they are legitimately entitled to the
    interest from the maximum float period for any given transaction.
    
    The BOD will have to choose between using the maximum float to bolster
    the bottom line, or sacrifice it for better member "fuzzies". In the
    latter case, it should also be marketed as a competitive weapon: "DCU,
    the shortest floats in town." Other things being equal, "We'll hold your
    funds only until the transfer clears," could be a strong
    differentiator. Even stronger, "All funds immediately available." Would
    that really be all that risky?
    

    
    
    
      The "float"  time is different from the "hold" time.  
    
      I thought DCU still paid interest on funds which were on "HOLD"?
    
    
    
    						-al
    

    DCU created its own mess by adopting the MAXIMUM legal hold periods at
    the time Regulation Z was put in place.  To its credit, some
    improvements have been made in the last year (possibly related to
    member unrest? 8^) but the fact remains that the holds placed on
    deposits are uncompetitively long.
    
    Consider BayBank, which has served as the standard "commercial bank" in
    this conference.  BayBank's policy is to give you immediate access to
    the first $100 of each deposit under $5000 and overnight access to the
    rest.  (All deposits made during the same day count as one deposit.) 
    They DO have the right to hold "questionable" checks, but they rarely
    exercise it.  If the deposits later "bounce", the amount will be
    deducted from the account and the appropriate fee assessed.  That's as
    it should be.

Many people replying to this note seem to have the following model on
how checks are cashed: (1) I give a check to the DCU; (2) the DCU
sends it to the issuing bank; (3) the issuing bank checks that the
funds exist; (4) the issuing bank sends the funds to the DCU; (5) the
DCU then receives the funds.  Under this model its seems right that
the hold on the check should be released as soon as the confirmation
of funds availability arrives along with the funds.

Actually, the banking system does not work by this model.  On the
evening of the day that I give the DCU the check, the DCU transfers
the check into the Federal Reserve system and immediately gets its
money.  If the check is not good then some evening in the future the
Federal Reserve system will return the check to the DCU and will take
the funds back from the DCU.  The only way the DCU knows that check is
good is by the lack of its return.  There is no positive
acknowledgment of acceptance.  The amount of time its takes for a
check to bounce depends on how many banking layers separate the
cashing and issuing banks.  It can take only a day if the banks are
local; longer if they are in the same Federal Reserve district; still
longer if they are in different Federal Reserve districts.

This explains why the DCU still has a hold even after you know the
check has been honored.

For me there is a simple solution to this problem.  I have a credit
line with the DCU.  Every time I have a big check to cash I instead
transfer that amount from the credit line to checking as a loan.  I
then immediately use the big check as the source of funds for a loan
payment.  Borrowing money and paying it back in the same day results
in no interest charge (providing the check I used for payment doesn't
turn out to be made of rubber).  Also, all the funds are immediately
available for use.

If you cannot qualify for a large enough credit line then this
technique is not available.  However, at some banks customers with
credit lines automatically get this treatment on deposits.  Deposited
funds are immediately available for spending but the amount of the
credit line is reduced during the hold period.  The DCU requires you
to manually move the funds between the accounts to get this effect.