Number: RS22036
Title: Expedited Funds Availability/Check-Holds
Authors: Pauline H. Smale, Government and Finance Division 
Abstract: The 2003 enactment of P.L. 108-100 (the Check 21 Act) refocused attention on the check-hold policies of financial institutions. This act made it easier for financial institutions to convert paper checks into electronically generated images and was aimed at making the clearing process between institutions faster and more efficient. The law did not require institutions to generate or receive check images, but required them to accept substitute checks created from electronic images. Consumer advocates were concerned that the implementation of Check 21 would result in money clearing out of accounts faster without speeding up the availability of funds deposited into accounts. Check 21 required the Federal Reserve to study and evaluate the impact of the act on the clearing process. In April 2007, the Federal Reserve issued a report to Congress on the results of such a study. The Federal Reserve recommended making no changes to the prevailing funds availability policies. Consumer advocates continued to urge Congress to reduce check holds by amending the EFAA. On September 16, 2008, the House Financial Services Committee ordered to be reported the Expedited Funds Availability Dollar Limits Adjustment Act of 2008 (H.R. 6871). This bill would make adjustments to the check-hold provisions of the EFAA.
Pages: 6
Date: October 10, 2008