[House Report 108-291]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-291
======================================================================
CHECK CLEARING FOR THE 21ST CENTURY ACT
_______
October 1, 2003.--Ordered to be printed
_______
Mr. Oxley, from the committee of conference, submitted the following
CONFERENCE REPORT
[To accompany H.R. 1474]
The committee of conference on the disagreeing votes of
the two Houses on the amendment of the Senate to the bill (H.R.
1474), to facilitate check truncation by authorizing substitute
checks, to foster innovation in the check collection system
without mandating receipt of checks in electronic form, and to
improve the overall efficiency of the Nation's payments system,
and for other purposes, having met, after full and free
conference, have agreed to recommend and do recommend to their
respective Houses as follows:
That the House recede from its disagreement to the
amendment of the Senate and agree to the same with an amendment
as follows:
In lieu of the matter proposed to be inserted by the
Senate amendment, insert the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Check
Clearing for the 21st Century Act'' or the ``Check 21 Act''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings; purposes.
Sec. 3. Definitions.
Sec. 4. General provisions governing substitute checks.
Sec. 5. Substitute check warranties.
Sec. 6. Indemnity.
Sec. 7. Expedited recredit for consumers.
Sec. 8. Expedited recredit procedures for banks.
Sec. 9. Delays in an emergency.
Sec. 10. Measure of damages.
Sec. 11. Statute of limitations and notice of claim.
Sec. 12. Consumer awareness.
Sec. 13. Effect on other law.
Sec. 14. Variation by agreement.
Sec. 15. Regulations.
Sec. 16. Study and report on funds availability.
Sec. 17. Statistical reporting of costs and revenues for transporting
checks between Federal Reserve banks.
Sec. 18. Evaluation and report by the Comptroller General.
Sec. 19. Depositary services efficiency and cost reduction.
Sec. 20. Effective date.
SEC. 2. FINDINGS; PURPOSES.
(a) Findings.--The Congress finds as follows:
(1) In the Expedited Funds Availability Act,
enacted on August 10, 1987, the Congress directed the
Board of Governors of the Federal Reserve System to
consider establishing regulations requiring Federal
reserve banks and depository institutions to provide
for check truncation, in order to improve the check
processing system.
(2) In that same Act, the Congress--
(A) provided the Board of Governors of the
Federal Reserve System with full authority to
regulate all aspects of the payment system,
including the receipt, payment, collection, and
clearing of checks, and related functions of
the payment system pertaining to checks; and
(B) directed that the exercise of such
authority by the Board superseded any State
law, including the Uniform Commercial Code, as
in effect in any State.
(3) Check truncation is no less desirable in 2003
for both financial service customers and the financial
services industry, to reduce costs, improve efficiency
in check collections, and expedite funds availability
for customers than it was over 15 years ago when
Congress first directed the Board to consider
establishing such a process.
(b) Purposes.--The purposes of this Act are as follows:
(1) To facilitate check truncation by authorizing
substitute checks.
(2) To foster innovation in the check collection
system without mandating receipt of checks in
electronic form.
(3) To improve the overall efficiency of the
Nation's payments system.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Account.--The term ``account'' means a deposit
account at a bank.
(2) Bank.--The term ``bank'' means any person that
is located in a State and engaged in the business of
banking and includes--
(A) any depository institution (as defined
in section 19(b)(1)(A) of the Federal Reserve
Act);
(B) any Federal reserve bank;
(C) any Federal home loan bank; or
(D) to the extent it acts as a payor--
(i) the Treasury of the United
States;
(ii) the United States Postal
Service;
(iii) a State government; or
(iv) a unit of general local
government (as defined in section
602(24) of the Expedited Funds
Availability Act).
(3) Banking terms.--
(A) Collecting bank.--The term ``collecting
bank'' means any bank handling a check for
collection except the paying bank.
(B) Depositary bank.--The term ``depositary
bank'' means--
(i) the first bank to which a check
is transferred, even if such bank is
also the paying bank or the payee; or
(ii) a bank to which a check is
transferred for deposit in an account
at such bank, even if the check is
physically received and indorsed first
by another bank.
(C) Paying bank.--The term ``paying bank''
means--
(i) the bank by which a check is
payable, unless the check is payable at
or through another bank and is sent to
the other bank for payment or
collection; or
(ii) the bank at or through which a
check is payable and to which the check
is sent for payment or collection.
(D) Returning bank.--
(i) In general.--The term
``returning bank'' means a bank (other
than the paying or depositary bank)
handling a returned check or notice in
lieu of return.
(ii) Treatment as collecting
bank.--No provision of this Act shall
be construed as affecting the treatment
of a returning bank as a collecting
bank for purposes of section 4-202(b)
of the Uniform Commercial Code.
(4) Board.--The term ``Board'' means the Board of
Governors of the Federal Reserve System.
(5) Business day.--The term ``business day'' has
the same meaning as in section 602(3) of the Expedited
Funds Availability Act.
(6) Check.--The term ``check''--
(A) means a draft, payable on demand and
drawn on or payable through or at an office of
a bank, whether or not negotiable, that is
handled for forward collection or return,
including a substitute check and a travelers
check; and
(B) does not include a noncash item or an
item payable in a medium other than United
States dollars.
(7) Consumer.--The term ``consumer'' means an
individual who--
(A) with respect to a check handled for
forward collection, draws the check on a
consumer account; or
(B) with respect to a check handled for
return, deposits the check into, or cashes the
check against, a consumer account.
(8) Consumer account.--The term ``consumer
account'' has the same meaning as in section 602(10) of
the Expedited Funds Availability Act.
(9) Customer.--The term ``customer'' means a person
having an account with a bank.
(10) Forward collection.--The term ``forward
collection'' means the transfer by a bank of a check to
a collecting bank for settlement or the paying bank for
payment.
(11) Indemnifying bank.--The term ``indemnifying
bank'' means a bank that is providing an indemnity
under section 6 with respect to a substitute check.
(12) MICR line.--The terms ``MICR line'' and
``magnetic ink character recognition line'' mean the
numbers, which may include the bank routing number,
account number, check number, check amount, and other
information, that are printed near the bottom of a
check in magnetic ink in accordance with generally
applicable industry standards.
(13) Noncash item.--The term ``noncash item'' has
the same meaning as in section 602(14) of the Expedited
Funds Availability Act.
(14) Person.--The term ``person'' means a natural
person, corporation, unincorporated company,
partnership, government unit or instrumentality, trust,
or any other entity or organization.
(15) Reconverting bank.--The term ``reconverting
bank'' means--
(A) the bank that creates a substitute
check; or
(B) if a substitute check is created by a
person other than a bank, the first bank that
transfers or presents such substitute check.
(16) Substitute check.--The term ``substitute
check'' means a paper reproduction of the original
check that--
(A) contains an image of the front and back
of the original check;
(B) bears a MICR line containing all the
information appearing on the MICR line of the
original check, except as provided under
generally applicable industry standards for
substitute checks to facilitate the processing
of substitute checks;
(C) conforms, in paper stock, dimension,
and otherwise, with generally applicable
industry standards for substitute checks; and
(D) is suitable for automated processing in
the same manner as the original check.
(17) State.--The term ``State'' has the same
meaning as in section 3(a) of the Federal Deposit
Insurance Act.
(18) Truncate.--The term ``truncate'' means to
remove an original paper check from the check
collection or return process and send to a recipient,
in lieu of such original paper check, a substitute
check or, by agreement, information relating to the
original check (including data taken from the MICR line
of the original check or an electronic image of the
original check), whether with or without subsequent
delivery of the original paper check.
(19) Uniform commercial code.--The term ``Uniform
Commercial Code'' means the Uniform Commercial Code in
effect in a State.
(20) Other terms.--Unless the context requires
otherwise, the terms not defined in this section shall
have the same meanings as in the Uniform Commercial
Code.
SEC. 4. GENERAL PROVISIONS GOVERNING SUBSTITUTE CHECKS.
(a) No Agreement Required.--A person may deposit, present,
or send for collection or return a substitute check without an
agreement with the recipient, so long as a bank has made the
warranties in section 5 with respect to such substitute check.
(b) Legal Equivalence.--A substitute check shall be the
legal equivalent of the original check for all purposes,
including any provision of any Federal or State law, and for
all persons if the substitute check--
(1) accurately represents all of the information on
the front and back of the original check as of the time
the original check was truncated; and
(2) bears the legend: ``This is a legal copy of
your check. You can use it the same way you would use
the original check.''.
(c) Endorsements.--A bank shall ensure that the substitute
check for which the bank is the reconverting bank bears all
endorsements applied by parties that previously handled the
check (whether in electronic form or in the form of the
original paper check or a substitute check) for forward
collection or return.
(d) Identification of Reconverting Bank.--A bank shall
identify itself as a reconverting bank on any substitute check
for which the bank is a reconverting bank so as to preserve any
previous reconverting bank identifications in conformance with
generally applicable industry standards.
(e) Applicable Law.--A substitute check that is the legal
equivalent of the original check under subsection (b) shall be
subject to any provision, including any provision relating to
the protection of customers, of part 229 of title 12 of the
Code of Federal Regulations, the Uniform Commercial Code, and
any other applicable Federal or State law as if such substitute
check were the original check, to the extent such provision of
law is not inconsistent with this Act.
SEC. 5. SUBSTITUTE CHECK WARRANTIES.
A bank that transfers, presents, or returns a substitute
check and receives consideration for the check warrants, as a
matter of law, to the transferee, any subsequent collecting or
returning bank, the depositary bank, the drawee, the drawer,
the payee, the depositor, and any endorser (regardless of
whether the warrantee receives the substitute check or another
paper or electronic form of the substitute check or original
check) that--
(1) the substitute check meets all the requirements
for legal equivalence under section 4(b); and
(2) no depositary bank, drawee, drawer, or endorser
will receive presentment or return of the substitute
check, the original check, or a copy or other paper or
electronic version of the substitute check or original
check such that the bank, drawee, drawer, or endorser
will be asked to make a payment based on a check that
the bank, drawee, drawer, or endorser has already paid.
SEC. 6. INDEMNITY.
(a) Indemnity.--A reconverting bank and each bank that
subsequently transfers, presents, or returns a substitute check
in any electronic or paper form, and receives consideration for
such transfer, presentment, or return shall indemnify the
transferee, any subsequent collecting or returning bank, the
depositary bank, the drawee, the drawer, the payee, the
depositor, and any endorser, up to the amount described in
subsections (b) and (c), as applicable, to the extent of any
loss incurred by any recipient of a substitute check if that
loss occurred due to the receipt of a substitute check instead
of the original check.
(b) Indemnity Amount.--
(1) Amount in event of breach of warranty.--The
amount of the indemnity under subsection (a) shall be
the amount of any loss (including costs and reasonable
attorney's fees and other expenses of representation)
proximately caused by a breach of a warranty provided
under section 5.
(2) Amount in absence of breach of warranty.--In
the absence of a breach of a warranty provided under
section 5, the amount of the indemnity under subsection
(a) shall be the sum of--
(A) the amount of any loss, up to the
amount of the substitute check; and
(B) interest and expenses (including costs
and reasonable attorney's fees and other
expenses of representation).
(c) Comparative Negligence.--
(1) In general.--If a loss described in subsection
(a) results in whole or in part from the negligence or
failure to act in good faith on the part of an
indemnified party, then that party's indemnification
under this section shall be reduced in proportion to
the amount of negligence or bad faith attributable to
that party.
(2) Rule of construction.--Nothing in this
subsection reduces the rights of a consumer or any
other person under the Uniform Commercial Code or other
applicable provision of Federal or State law.
(d) Effect of Producing Original Check or Copy.--
(1) In general.--If the indemnifying bank produces
the original check or a copy of the original check
(including an image or a substitute check) that
accurately represents all of the information on the
front and back of the original check (as of the time
the original check was truncated) or is otherwise
sufficient to determine whether or not a claim is
valid, the indemnifying bank shall--
(A) be liable under this section only for
losses covered by the indemnity that are
incurred up to the time that the original check
or copy is provided to the indemnified party;
and
(B) have a right to the return of any funds
it has paid under the indemnity in excess of
those losses.
(2) Coordination of indemnity with implied
warranty.--The production of the original check, a
substitute check, or a copy under paragraph (1) by an
indemnifying bank shall not absolve the bank from any
liability on a warranty established under this Act or
any other provision of law.
(e) Subrogation of Rights.--
(1) In general.--Each indemnifying bank shall be
subrogated to the rights of any indemnified party to
the extent of the indemnity.
(2) Recovery under warranty.--A bank that
indemnifies a party under this section may attempt to
recover from another party based on a warranty or other
claim.
(3) Duty of indemnified party.--Each indemnified
party shall have a duty to comply with all reasonable
requests for assistance from an indemnifying bank in
connection with any claim the indemnifying bank brings
against a warrantor or other party related to a check
that forms the basis for the indemnification.
SEC. 7. EXPEDITED RECREDIT FOR CONSUMERS.
(a) Recredit Claims.--
(1) In general.--A consumer may make a claim for
expedited recredit from the bank that holds the account
of the consumer with respect to a substitute check, if
the consumer asserts in good faith that--
(A) the bank charged the consumer's account
for a substitute check that was provided to the
consumer;
(B) either--
(i) the check was not properly
charged to the consumer's account; or
(ii) the consumer has a warranty
claim with respect to such substitute
check;
(C) the consumer suffered a resulting loss;
and
(D) the production of the original check or
a better copy of the original check is
necessary to determine the validity of any
claim described in subparagraph (B).
(2) 40-day period.--Any claim under paragraph (1)
with respect to a consumer account may be submitted by
a consumer before the end of the 40-day period
beginning on the later of--
(A) the date on which the financial
institution mails or delivers, by a means
agreed to by the consumer, the periodic
statement of account for such account which
contains information concerning the transaction
giving rise to the claim; or
(B) the date on which the substitute check
is made available to the consumer.
(3) Extension under extenuating circumstances.--If
the ability of the consumer to submit the claim within
the 40-day period under paragraph (2) is delayed due to
extenuating circumstances, including extended travel or
the illness of the consumer, the 40-day period shall be
extended by a reasonable amount of time.
(b) Procedures for Claims.--
(1) In general.--To make a claim for an expedited
recredit under subsection (a) with respect to a
substitute check, the consumer shall provide to the
bank that holds the account of such consumer--
(A) a description of the claim, including
an explanation of--
(i) why the substitute check was
not properly charged to the consumer's
account; or
(ii) the warranty claim with
respect to such check;
(B) a statement that the consumer suffered
a loss and an estimate of the amount of the
loss;
(C) the reason why production of the
original check or a better copy of the original
check is necessary to determine the validity of
the charge to the consumer's account or the
warranty claim; and
(D) sufficient information to identify the
substitute check and to investigate the claim.
(2) Claim in writing.--
(A) In general.--The bank holding the
consumer account that is the subject of a claim
by the consumer under subsection (a) may, in
the discretion of the bank, require the
consumer to submit the information required
under paragraph (1) in writing.
(B) Means of submission.--A bank that
requires a submission of information under
subparagraph (A) may permit the consumer to
make the submission electronically, if the
consumer has agreed to communicate with the
bank in that manner.
(c) Recredit to Consumer.--
(1) Conditions for recredit.--The bank shall
recredit a consumer account in accordance with
paragraph (2) for the amount of a substitute check that
was charged against the consumer account if--
(A) a consumer submits a claim to the bank
with respect to that substitute check that
meets the requirement of subsection (b); and
(B) the bank has not--
(i) provided to the consumer--
(I) the original check; or
(II) a copy of the original
check (including an image or a
substitute check) that
accurately represents all of
the information on the front
and back of the original check,
as of the time at which the
original check was truncated;
and
(ii) demonstrated to the consumer
that the substitute check was properly
charged to the consumer account.
(2) Timing of recredit.--
(A) In general.--The bank shall recredit
the consumer's account for the amount described
in paragraph (1) no later than the end of the
business day following the business day on
which the bank determines the consumer's claim
is valid.
(B) Recredit pending investigation.--If the
bank has not yet determined that the consumer's
claim is valid before the end of the 10th
business day after the business day on which
the consumer submitted the claim, the bank
shall recredit the consumer's account for--
(i) the lesser of the amount of the
substitute check that was charged
against the consumer account, or
$2,500, together with interest if the
account is an interest-bearing account,
no later than the end of such 10th
business day; and
(ii) the remaining amount of the
substitute check that was charged
against the consumer account, if any,
together with interest if the account
is an interest-bearing account, not
later than the 45th calendar day
following the business day on which the
consumer submits the claim.
(d) Availability of Recredit.--
(1) Next business day availability.--Except as
provided in paragraph (2), a bank that provides a
recredit to a consumer account under subsection (c)
shall make the recredited funds available for
withdrawal by the consumer by the start of the next
business day after the business day on which the bank
recredits the consumer's account under subsection (c).
(2) Safeguard exceptions.--A bank may delay
availability to a consumer of a recredit provided under
subsection (c)(2)(B)(i) until the start of either the
business day following the business day on which the
bank determines that the consumer's claim is valid or
the 45th calendar day following the business day on
which the consumer submits a claim for such recredit in
accordance with subsection (b), whichever is earlier,
in any of the following circumstances:
(A) New accounts.--The claim is made during
the 30-day period beginning on the business day
the consumer account was established.
(B) Repeated overdrafts.--Without regard to
the charge that is the subject of the claim for
which the recredit was made--
(i) on 6 or more business days
during the 6-month period ending on the
date on which the consumer submits the
claim, the balance in the consumer
account was negative or would have
become negative if checks or other
charges to the account had been paid;
or
(ii) on 2 or more business days
during such 6-month period, the balance
in the consumer account was negative or
would have become negative in the
amount of $5,000 or more if checks or
other charges to the account had been
paid.
(C) Prevention of fraud losses.--The bank
has reasonable cause to believe that the claim
is fraudulent, based on facts (other than the
fact that the check in question or the consumer
is of a particular class) that would cause a
well-grounded belief in the mind of a
reasonable person that the claim is fraudulent.
(3) Overdraft fees.--No bank that, in accordance
with paragraph (2), delays the availability of a
recredit under subsection (c) to any consumer account
may impose any overdraft fees with respect to drafts
drawn by the consumer on such recredited amount before
the end of the 5-day period beginning on the date
notice of the delay in the availability of such amount
is sent by the bank to the consumer.
(e) Reversal of Recredit.--A bank may reverse a recredit to
a consumer account if the bank--
(1) determines that a substitute check for which
the bank recredited a consumer account under subsection
(c) was in fact properly charged to the consumer
account; and
(2) notifies the consumer in accordance with
subsection (f)(3).
(f) Notice to Consumer.--
(1) Notice if consumer claim not valid.--If a bank
determines that a substitute check subject to the
consumer's claim was in fact properly charged to the
consumer's account, the bank shall send to the
consumer, no later than the business day following the
business day on which the bank makes a determination--
(A) the original check or a copy of the
original check (including an image or a
substitute check) that--
(i) accurately represents all of
the information on the front and back
of the original check (as of the time
the original check was truncated); or
(ii) is otherwise sufficient to
determine whether or not the consumer's
claim is valid; and
(B) an explanation of the basis for the
determination by the bank that the substitute
check was properly charged, including a
statement that the consumer may request copies
of any information or documents on which the
bank relied in making the determination.
(2) Notice of recredit.--If a bank recredits a
consumer account under subsection (c), the bank shall
send to the consumer, no later than the business day
following the business day on which the bank makes the
recredit, a notice of--
(A) the amount of the recredit; and
(B) the date the recredited funds will be
available for withdrawal.
(3) Notice of reversal of recredit.--In addition to
the notice required under paragraph (1), if a bank
reverses a recredited amount under subsection (e), the
bank shall send to the consumer, no later than the
business day following the business day on which the
bank reverses the recredit, a notice of--
(A) the amount of the reversal; and
(B) the date the recredit was reversed.
(4) Mode of delivery.--A notice described in this
subsection shall be delivered by United States mail or
by any other means through which the consumer has
agreed to receive account information.
(g) Other Claims Not Affected.--Providing a recredit in
accordance with this section shall not absolve the bank from
liability for a claim made under any other law, such as a claim
for wrongful dishonor under the Uniform Commercial Code, or
from liability for additional damages under section 6 or 10.
(h) Clarification Concerning Consumer Possession.--A
consumer who was provided a substitute check may make a claim
for an expedited recredit under this section with regard to a
transaction involving the substitute check whether or not the
consumer is in possession of the substitute check.
(i) Scope of Application.--This section shall only apply to
customers who are consumers.
SEC. 8. EXPEDITED RECREDIT PROCEDURES FOR BANKS.
(a) Recredit Claims.--
(1) In general.--A bank may make a claim against an
indemnifying bank for expedited recredit for which that
bank is indemnified if--
(A) the claimant bank (or a bank that the
claimant bank has indemnified) has received a
claim for expedited recredit from a consumer
under section 7 with respect to a substitute
check or would have been subject to such a
claim had the consumer's account been charged;
(B) the claimant bank has suffered a
resulting loss or is obligated to recredit a
consumer account under section 7 with respect
to such substitute check; and
(C) production of the original check,
another substitute check, or a better copy of
the original check is necessary to determine
the validity of the charge to the customer
account or any warranty claim connected with
such substitute check.
(2) 120-day period.--Any claim under paragraph (1)
may be submitted by the claimant bank to an
indemnifying bank before the end of the 120-day
beginning on the date of the transaction that gave rise
to the claim.
(b) Procedures for Claims.--
(1) In general.--To make a claim under subsection
(a) for an expedited recredit relating to a substitute
check, the claimant bank shall send to the indemnifying
bank--
(A) a description of--
(i) the claim, including an
explanation of why the substitute check
cannot be properly charged to the
consumer account; or
(ii) the warranty claim;
(B) a statement that the claimant bank has
suffered a loss or is obligated to recredit the
consumer's account under section 7, together
with an estimate of the amount of the loss or
recredit;
(C) the reason why production of the
original check, another substitute check, or a
better copy of the original check is necessary
to determine the validity of the charge to the
consumer account or the warranty claim; and
(D) information sufficient for the
indemnifying bank to identify the substitute
check and to investigate the claim.
(2) Requirements relating to copies of substitute
checks.--If the information submitted by a claimant
bank pursuant to paragraph (1) in connection with a
claim for an expedited recredit includes a copy of any
substitute check for which any such claim is made, the
claimant bank shall take reasonable steps to ensure
that any such copy cannot be--
(A) mistaken for the legal equivalent of
the check under section 4(b); or
(B) sent or handled by any bank, including
the indemnifying bank, as a forward collection
or returned check.
(3) Claim in writing.--
(A) In general.--An indemnifying bank may,
in the discretion of the bank, require the
claimant bank to submit the information
required by paragraph (1) in writing, including
a copy of the written or electronically
submitted claim, if any, that the consumer
provided in accordance with section 7(b).
(B) Means of submission.--An indemnifying
bank that requires a submission of information
under subparagraph (A) may permit the claimant
bank to make the submission electronically, if
the claimant bank has agreed to communicate
with the indemnifying bank in that manner.
(c) Recredit by Indemnifying Bank.--
(1) Prompt action required.--No later than 10
business days after the business day on which an
indemnifying bank receives a claim under subsection (a)
from a claimant bank with respect to a substitute
check, the indemnifying bank shall--
(A) provide, to the claimant bank, the
original check (with respect to such substitute
check) or a copy of the original check
(including an image or a substitute check)
that--
(i) accurately represents all of
the information on the front and back
of the original check (as of the time
the original check was truncated); or
(ii) is otherwise sufficient to
determine the bank's claim is not
valid; and
(B) recredit the claimant bank for the
amount of the claim up to the amount of the
substitute check, plus interest if applicable;
or
(C) provide information to the claimant
bank as to why the indemnifying bank is not
obligated to comply with subparagraph (A) or
(B).
(2) Recredit does not abrogate other liabilities.--
Providing a recredit under this subsection to a
claimant bank with respect to a substitute check shall
not absolve the indemnifying bank from liability for
claims brought under any other law or from additional
damages under section 6 or 10 with respect to such
check.
(3) Refund to indemnifying bank.--If a claimant
bank reverses, in accordance with section 7(e), a
recredit previously made to a consumer account under
section 7(c), or otherwise receives a credit or
recredit with regard to such substitute check, the
claimant bank shall promptly refund to any indemnifying
bank any amount previously advanced by the indemnifying
bank in connection with such substitute check.
(d) Production of Original Check or a Sufficient Copy
Governed by Section 6(d).--If the indemnifying bank provides
the claimant bank with the original check or a copy of the
original check (including an image or a substitute check) under
subsection (c)(1)(A), section 6(d) shall govern any right of
the indemnifying bank to any repayment of any funds the
indemnifying bank has recredited to the claimant bank pursuant
to subsection (c).
SEC. 9. DELAYS IN AN EMERGENCY.
A delay by a bank beyond the time limits prescribed or
permitted by this Act shall be excused if the delay is caused
by interruption of communication or computer facilities,
suspension of payments by another bank, war, emergency
conditions, failure of equipment, or other circumstances beyond
the control of a bank and if the bank uses such diligence as
the circumstances require.
SEC. 10. MEASURE OF DAMAGES.
(a) Liability.--
(1) In general.--Except as provided in section 6,
any person who, in connection with a substitute check,
breaches any warranty under this Act or fails to comply
with any requirement imposed by, or regulation
prescribed pursuant to, this Act with respect to any
other person shall be liable to such person in an
amount equal to the sum of--
(A) the lesser of--
(i) the amount of the loss suffered
by the other person as a result of the
breach or failure; or
(ii) the amount of the substitute
check; and
(B) interest and expenses (including costs
and reasonable attorney's fees and other
expenses of representation) related to the
substitute check.
(2) Offset of recredits.--The amount of damages any
person receives under paragraph (1), if any, shall be
reduced by the amount, if any, that the claimant
receives and retains as a recredit under section 7 or
8.
(b) Comparative Negligence.--
(1) In general.--If a person incurs damages that
resulted in whole or in part from the negligence or
failure of that person to act in good faith, then the
amount of any liability due to that person under
subsection (a) shall be reduced in proportion to the
amount of negligence or bad faith attributable to that
person.
(2) Rule of construction.--Nothing in this
subsection reduces the rights of a consumer or any
other person under the Uniform Commercial Code or other
applicable provision of Federal or State law.
SEC. 11. STATUTE OF LIMITATIONS AND NOTICE OF CLAIM.
(a) Actions Under This Act.--
(1) In general.--An action to enforce a claim under
this Act may be brought in any United States district
court, or in any other court of competent jurisdiction,
before the end of the 1-year period beginning on the
date the cause of action accrues.
(2) Accrual.--A cause of action accrues as of the
date the injured party first learns, or by which such
person reasonably should have learned, of the facts and
circumstances giving rise to the cause of action.
(b) Discharge of Claims.--Except as provided in subsection
(c), unless a person gives notice of a claim to the
indemnifying or warranting bank within 30 days after the person
has reason to know of the claim and the identity of the
indemnifying or warranting bank, the indemnifying or warranting
bank is discharged from liability in an action to enforce a
claim under this Act to the extent of any loss caused by the
delay in giving notice of the claim.
(c) Notice of Claim by Consumer.--A timely claim by a
consumer under section 7 for expedited recredit constitutes
timely notice of a claim by the consumer for purposes of
subsection (b).
SEC. 12. CONSUMER AWARENESS.
(a) In General.--Each bank shall provide, in accordance
with subsection (b), a brief notice about substitute checks
that describes--
(1) how a substitute check is the legal equivalent
of an original check for all purposes, including any
provision of any Federal or State law, and for all
persons, if the substitute check--
(A) accurately represents all of the
information on the front and back of the
original check as of the time at which the
original check was truncated; and
(B) bears the legend: `This is a legal copy
of your check. You can use it in the same way
you would use the original check.'; and
(2) the consumer recredit rights established under
section 7 when a consumer believes in good faith that a
substitute check was not properly charged to the
account of the consumer.
(b) Distribution.--
(1) Existing customers.--With respect to consumers
who are customers of a bank on the effective date of
this Act and who receive original checks or substitute
checks, a bank shall provide the notice described in
subsection (a) to each such consumer no later than the
first regularly scheduled communication with the
consumer after the effective date of this Act.
(2) New account holders.--A bank shall provide the
notice described in subsection (a) to each consumer who
will receive original checks or substitute checks,
other than existing customers referred to in paragraph
(1), at the time at which the customer relationship is
initiated.
(3) Mode of delivery.--A bank may send the notices
required by this subsection by United States mail or by
any other means through which the consumer has agreed
to receive account information.
(4) Consumers who request copies of checks.--Notice
shall be provided to each consumer of the bank that
requests a copy of a check and receives a substitute
check, at the time of the request.
(c) Model Language.--
(1) In general.--Before the end of the 9-month
period beginning on the date of the enactment of this
Act, the Board shall publish model forms and clauses
that a bank may use to describe each of the elements
required by subsection (a).
(2) Safe harbor.--
(A) In general.--A bank shall be treated as
being in compliance with the requirements of
subsection (a) if the bank's substitute check
notice uses a model form or clause published by
the Board and such model form or clause
accurately describes the bank's policies and
practices.
(B) Deletion or rearrangement.--A bank may
delete any information in the model form or
clause that is not required by this Act or
rearrange the format.
(3) Use of model language not required.--This
section shall not be construed as requiring any bank to
use a model form or clause that the Board prepares
under this subsection.
SEC. 13. EFFECT ON OTHER LAW.
This Act shall supersede any provision of Federal or State
law, including the Uniform Commercial Code, that is
inconsistent with this Act, but only to the extent of the
inconsistency.
SEC. 14. VARIATION BY AGREEMENT.
(a) Section 8.--Any provision of section 8 may be varied by
agreement of the banks involved.
(b) No Other Provisions May Be Varied.--Except as provided
in subsection (a), no provision of this Act may be varied by
agreement of any person or persons.
SEC. 15. REGULATIONS.
The Board may prescribe such regulations as the Board
determines to be necessary to implement, prevent circumvention
or evasion of, or facilitate compliance with the provisions of
this Act.
SEC. 16. STUDY AND REPORT ON FUNDS AVAILABILITY.
(a) Study.--In order to evaluate the implementation and the
impact of this Act, the Board shall conduct a study of--
(1) the percentage of total checks cleared in which
the paper check is not returned to the paying bank;
(2) the extent to which banks make funds available
to consumers for local and nonlocal checks prior to the
expiration of maximum hold periods;
(3) the length of time within which depositary
banks learn of the nonpayment of local and nonlocal
checks;
(4) the increase or decrease in check-related
losses over the study period; and
(5) the appropriateness of the time periods and
amount limits applicable under sections 603 and 604 of
the Expedited Funds Availability Act, as in effect on
the date of enactment of this Act.
(b) Report to Congress.--Before the end of the 30-month
period beginning on the effective date of this Act, the Board
shall submit a report to the Congress containing the results of
the study conducted under this section, together with
recommendations for legislative action.
SEC. 17. STATISTICAL REPORTING OF COSTS AND REVENUES FOR TRANSPORTING
CHECKS BETWEEN RESERVE BANKS.
In the annual report prepared by the Board for the first
full calendar year after the date of enactment of this Act and
in each of the 9 subsequent annual reports by the Board, the
Board shall include the amount of operating costs attributable
to, and an estimate of the Federal Reserve banks' imputed
revenues derived from, the transportation of commercial checks
between Federal Reserve bank check processing centers.
SEC. 18. EVALUATION AND REPORT BY THE COMPTROLLER GENERAL.
(a) Study.--During the 5-year period beginning on the date
of the enactment of this Act, the Comptroller General of the
United States shall evaluate the implementation and
administration of this Act, including--
(1) an estimate of the gains in economic efficiency
made possible from check truncation;
(2) an evaluation of the benefits accruing to
consumers and financial institutions from reduced
transportation costs, longer hours for accepting
deposits for credit within 1 business day, the impact
of fraud losses, and an estimate of consumers' share of
the total benefits derived from this Act; and
(3) an assessment of consumer acceptance of the
check truncation process resulting from this Act, as
well as any new costs incurred by consumers who had
their original checks returned with their regular
monthly statements prior to the date of enactment of
this Act.
(b) Report to Congress.--Before the end of the 5-year
period referred to in subsection (a), the Comptroller General
shall submit a report to the Congress containing the findings
and conclusions of the Comptroller General in connection with
the evaluation conducted pursuant to subsection (a), together
with such recommendations for legislative and administrative
action as the Comptroller General may determine to be
appropriate.
SEC. 19. DEPOSITARY SERVICES EFFICIENCY AND COST REDUCTION.
(a) Findings.--The Congress finds as follows:
(1) The Secretary of the Treasury has long
compensated financial institutions for various critical
depositary and financial agency services provided for
or on behalf of the United States by--
(A) placing large balances, commonly
referred to as ``compensating balances'', on
deposit at such institutions; and
(B) using imputed interest on such funds to
offset charges for the various depositary and
financial agency services provided to or on
behalf of the Government.
(2) As a result of sharp declines in interest rates
over the last few years to record low levels, or the
public debt outstanding reaching the statutory debt
limit, the Department of the Treasury often has had to
dramatically increase or decrease the size of the
compensating balances on deposit at these financial
institutions.
(3) The fluctuation of the compensating balances,
and the necessary pledging of collateral by financial
institutions to secure the value of compensating
balances placed with those institutions, have created
unintended financial uncertainty for the Secretary of
the Treasury and for the management by financial
institutions of their cash and securities.
(4) It is imperative that the process for providing
financial services to the Government be transparent,
and provide the information necessary for the Congress
to effectively exercise its appropriation and oversight
responsibilities.
(5) The use of direct payment for services rendered
would strengthen cash and debt management
responsibilities of the Secretary of the Treasury
because the Secretary would no longer need to
dramatically increase or decrease the level of such
balances when interest rates fluctuate sharply or when
the public debt outstanding reaches the statutory debt
limit.
(6) An alternative to the use of compensating
balances, such as direct payments to financial
institutions, would ensure that payments to financial
institutions for the services they provide would be
made in a more predictable manner and could result in
cost savings.
(7) Limiting the use of compensating balances could
result in a more direct and cost-efficient method of
obtaining those services currently provided under
compensating balance arrangements.
(8) A transition from the use of compensating
balances to another compensation method must be
carefully managed to prevent higher-than-necessary
transitional costs and enable participating financial
institutions to modify their planned investment of cash
and securities.
(b) Authorization of Appropriations For Services Rendered
by Depositaries and Financial Agencies of the United States.--
There are authorized to be appropriated for fiscal years
beginning after fiscal year 2003 to the Secretary of the
Treasury such sums as may be necessary for reimbursing
financial institutions in their capacity as depositaries and
financial agents of the United States for all services required
or directed by the Secretary of the Treasury, or a designee of
the Secretary, to be performed by such financial institutions
on behalf of the Secretary of the Treasury or another Federal
agency, including services rendered before fiscal year 2004.
(c) Orderly Transition.--
(1) In general.--As appropriations authorized in
subsection (b) become available, the Secretary of the
Treasury shall promptly begin the process of phasing in
the use of the appropriations to pay financial
institutions serving as depositaries and financial
agents of the United States, and transitioning from the
use of compensating balances to fund these services.
(2) Post-transition use limited to extraordinary
circumstances.--
(A) In general.--Following the transition
to the use of the appropriations authorized in
subsection (b), the Secretary of the Treasury
may use the compensating balances to pay
financial institutions serving as depositaries
and financial agents of the United States only
in extraordinary situations where the Secretary
determines that they are needed to ensure the
fiscal operations of the Government continue to
function in an efficient and effective manner.
(B) Report.--Any use of compensating
balances pursuant to subparagraph (A) shall
promptly be reported by the Secretary of the
Treasury to the Committee on Financial Services
of the House of Representatives and the
Committee on Banking, Housing, and Urban
Affairs of the Senate.
(3) Requirements for orderly transition.--In
transitioning to the use of the appropriations
authorized in subsection (b), the Secretary of the
Treasury shall take such steps as may be appropriate
to--
(A) prevent abrupt financial disruption to
the functions of the Department of the Treasury
or to the participating financial institutions;
and
(B) maintain adequate accounting and
management controls to ensure that payments to
financial institutions for their banking
services provided to the Government as
depositaries and financial agents are accurate
and that the arrangements last no longer than
is necessary.
(4) Reports required.--
(A) Annual report.--
(i) In general.--For each fiscal
year, the Secretary of the Treasury
shall submit a report to the Congress
on the use of compensating balances and
on the use of appropriations authorized
in subsection (b) during that fiscal
year.
(ii) Inclusion in budget.--The
report required under clause (i) may be
submitted as part of the budget
submitted by the President under
section 1105 of the title 31, United
States Code, for the following fiscal
year and if so, the report shall be
submitted concurrently to the Committee
on Financial Services of the House of
Representatives and the Committee on
Banking, Housing, and Urban Affairs of
the Senate.
(B) Final report following transition.--
(i) In general.--Following
completion of the transition from the
use of compensating balances to the use
of the appropriations authorized in
subsection (b) to pay financial
institutions for their services as
depositaries and financial agents of
the United States, the Secretary of the
Treasury shall submit a report on the
transition to the Committee on
Financial Services of the House of
Representatives and the Committee on
Banking, Housing, and Urban Affairs of
the Senate.
(ii) Contents of report.--The
report submitted under clause (i) shall
include a detailed analysis of--
(I) the cost of transition;
(II) the direct costs of
the services being paid from
the appropriations authorized
in subsection (b); and
(III) the benefits realized
from the use of direct payment
for such services, rather than
the use of compensating balance
arrangements.
(d) Technical Amendment.--The 2d undesignated paragraph of
section 16 of the Federal Reserve Act (12 U.S.C. 412) is
amended--
(1) in the 3d sentence, by inserting ``or any other
asset of a Federal reserve bank'' before the period at
the end; and
(2) in the last sentence, by inserting ``, or are
otherwise held by or on behalf of,'' after ``in the
vaults of''.
(e) Effective Date.--Notwithstanding section 20, this
section shall take effect on the date of the enactment of this
Act.
SEC. 20. EFFECTIVE DATE.
This Act shall take effect at the end of the 12-month
period beginning on the date of the enactment of this Act,
except as otherwise specifically provided in this Act.
And the Senate agree to the same.
For consideration of the House bill and the
Senate amendment, and modifications committed
to conference:
Michael G. Oxley,
Spencer Bachus,
Steven C. LaTourette,
Melissa A. Hart,
Patrick J. Tiberi,
Barney Frank,
Harold E. Ford, Jr.,
Managers on the Part of the House.
Richard C. Shelby,
Robert F. Bennett,
Wayne Allard,
Paul S. Sarbanes,
Tim Johnson,
Managers on the Part of the Senate.
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at the
conference on the disagreeing votes of the two Houses on the
amendment of the Senate to the bill (H.R. 1474), to facilitate
check truncation by authorizing substitute checks, to foster
innovation in the check collection system without mandating
receipt of checks in electronic form, and to improve the
overall efficiency of the Nation's payments system, and for
other purposes, submit the following joint statement to the
House and the Senate in explanation of the effect of the action
agreed upon by the managers and recommended in the accompanying
conference report:
The Senate amendment struck all of the House bill after the
enacting clause and inserted a substitute text.
The House recedes from its disagreement to the amendment of
the Senate with an amendment that is a substitute for the House
bill and the Senate amendment.
The Managers on the part of the House and the Senate met
on October 1, 2003 (the House chairing), and reconciled the
differences between the House bill and the Senate amendment.
The differences between the House bill, the Senate
amendment, and the substitute agreed to in conference are noted
below, except for clerical corrections, conforming changes made
necessary by agreements reached by the conferees, and minor
drafting and clarifying changes.
Short Title; Table of Contents; Findings and Purposes
House Bill
Section 1 of the House bill establishes the short title
of the bill, the ``Check Clearing for the 21st Century Act,''
or the ``Check 21 Act'', and provides the findings and purposes
of the legislation.
Senate Amendment
Section 1 of the Senate amendment provides the short
title of the bill, the ``Check Truncation Act of 2003'', and a
table of contents. Section 2 of the Senate amendment also
provides the findings and purposes of the legislation.
Conference Agreement
The Senate recedes to the House.
Definitions
House Bill
Section 2 of the House bill defines certain terms,
including ``substitute check,'' ``reconverting bank,''
``collecting bank,'' ``depositary bank,'' ``claimant bank,''
and ``truncate.''
Senate Amendment
Section 3 of the Senate amendment defines certain terms,
including ``indemnifying bank'', ``MICR line'', ``reconverting
bank'', ``truncate'' and ``substitute check''.
Conference Agreement
The House recedes to the Senate with an amendment
removing the definition of ``claimant bank''.
General Provisions Governing Substitute Checks
House Bill
Section 3 of the House bill allows a person to deposit,
present, or send for collection or return a substitute check
without an agreement with the recipient. This section mandates
that a substitute check have the legal equivalence of an
original check if the substitute check: (i) accurately
represents all of the information on the front and back of the
original check at the time the original check was truncated;
and (ii) contains the legend ``this is a copy of your check.
You can use it the same way you would use the original check.''
The reconverting bank must ensure that the substitute
check bears all the endorsements applied by all of the parties
that previously handled the check and must identify itself as
the reconverting bank.
Senate Amendment
Section 4 of the Senate amendment allows a person to
deposit, present or send for collection or return a substitute
check without an agreement with the recipient. This section
mandates that a substitute check have the legal equivalence of
an original check if the substitute check: (i) accurately
represents all of the information on the front and back of the
original check at the time the original check was truncated;
and (ii) contains the legend ``this is a copy of your check.
You can use it the same way you would use the original check.''
The reconverting bank must ensure that the substitute
check bears all the endorsements applied by all of the parties
that previously handled the check and shall identify itself as
the reconverting bank.
Conference Agreement
This provision is not in disagreement.
Substitute Check Warranties
House Bill
Section 4 of the House bill provides that a bank that
transfers, presents or returns a substitute check and receives
consideration for the check is deemed to have warranted that
the substitute check meets all requirements for legal
equivalence and that no entity will be asked to make a payment
on a check already paid.
Senate Amendment
Section 5 of the Senate amendment states that a bank that
transfers, presents or returns a substitute check and receives
consideration for the check is deemed to have warranted that
the substitute check meets all requirements for legal
equivalence and that no entity will be asked to make a payment
on a check already paid.
Conference Agreement
This provision is not in disagreement.
Indemnity
House Bill
Section 5 of the House bill grants an indemnity to the
transferee by a reconverting bank and each bank that
subsequently transfers, presents or returns a substitute check
and receives consideration for the transfer, presentment, or
return up to either the amount of the loss proximately caused
by the breach of the warranty provided in section 4 or, in the
absence of such a breach, the amount of any loss up to the
amount of the substitute check plus any interest or expenses.
This section also allows for comparative negligence if a
loss results in whole or in part from the negligence or failure
to act in good faith on the part of the indemnified party,
reducing that party's indemnification by the amount of
negligence or bad faith.
Senate Amendment
Section 6 of the Senate amendment bill grants an
indemnity to the transferee by a reconverting bank and each
bank that subsequently transfers, presents or returns a
substitute check and receives consideration for such transfer,
presentment or return up to either the amount of the loss
proximately caused by the breach of the warranty provided in
section 4 or, in the absence of such a breach, the amount of
any loss up to the amount of the substitute check plus any
interest or expenses.
This section also allows for comparative negligence if a
loss results in whole or in part from the negligence or failure
to act in good faith on the part of the indemnified party,
reducing that party's indemnification by the amount of
negligence or bad faith. Section 6(c)(2) of this section states
that nothing in the comparative negligence provisions of
section 6(c)(1) reduces consumer's rights under other laws.
Conference Agreement
The House recedes to the Senate.
Expedited Recredit for Consumers
House Bill
Section 6 of the House bill provides an expedited
recredit to a consumer if the consumer asserts that the bank
charged the customer's account improperly or the customer has a
warranty claim with respect to the substitute check. The
customer must show that they suffered a loss and that the
production of the original or a better copy of the original is
necessary to determine the validity of any claim. This claim
must be made within 30 days after receiving their periodic
statement and may have an additional 30 days to file a claim
under extenuating circumstances. According to this section, if
the bank has not determined if the claim is valid within 10
business days, the bank must recredit the lesser of the amount
charged, or $2,500 with interest and any remaining amount must
be recredited within 45 calendar days. Additionally, a consumer
does not have to be in possession of the substitute check in
order to make a claim.
Senate Amendment
Section 7 of the Senate amendment requires the consumer
to make a claim for expedited recredit within 40 days after the
bank transmits the periodic statement or receipt of the
substitute check, whichever is later. Under extenuating
circumstances, including extended travel or illness of the
consumer, the bank shall extend the period for a reasonable
amount of time.
Section 7(c)(1)(B) requires that banks do not have to
provide copies of documentation relied upon in denying an
expedited recredit claim. Instead, a bank must provide a
statement of right of the consumer to request such
documentation.
Conference Agreement
The Conference Agreement consists of the Senate
provisions relating to (1) the time period for expedited
recredit; (2) the extension of the time period for expedited
recredit; and (3) allowing electronic submission of expedited
recredit claims. Further, the Conference Agreement provides
that, when resolving customer claims, the delivered copy of the
original check must read that the check ``accurately represents
all the information'' on the original check standard and that
the bank does not have to provide copies of documentation
relied upon in denying expedited recredit claim. Instead, a
bank must provide a statement of the right of the consumer to
request such documentation.
The Conference Agreement also adopts the House provision
providing that a consumer who receives a substitute check does
not need to currently have the substitute check to make a claim
for expedited recredit.
Expedited Recredit Procedures for Banks
House Bill
Section 7 of the House bill permits a bank to make a
claim against an indemnifying bank for an expedited recredit if
the claimant's customer has made a claim for recredit, the
claimantbank has suffered a loss, and production of the
original check, a substitute check or a better copy of the check is
necessary to determine the validity of the charge. This claim must be
made within 120 days of the transaction. This claim must be in writing
and must describe the claim and demonstrate a loss.
Senate Amendment
Section 8 of the Senate amendment permits a bank to make
a claim against an indemnifying bank for an expedited recredit
if the claimant's customer has made a claim for recredit, the
claimant bank has suffered a loss, and production of the
original check, a substitute check or a better copy of the
check is necessary to determine the validity of the charge.
This claim must be made within 120 days of the transaction.
This claim must be in writing and must describe the claim and
demonstrate a loss.
Conference Agreement
This provision is not in disagreement.
Delays in an Emergency
House Bill
Section 8 of the House bill permits delays in compliance
with the provisions of this legislation if they are caused by
circumstances beyond the control of a bank, and if the bank
used such diligence as the circumstances require.
Senate Amendment
Section 9 of the Senate amendment permits delays in
compliance with the provisions of this legislation if they are
caused by circumstances beyond the control of a bank, and if
the bank used such diligence as the circumstances require.
Conference Agreement
This provision is not in disagreement.
Measure of Damages
House Bill
Section 9 of the House bill makes persons who breach a
warranty or fail to comply with the bill, or regulations under
the bill, liable for the lesser of the amount of the loss or
the amount of the substitute check plus interest and expenses.
This section applies a comparative negligence standard for the
determination of damages.
Senate Amendment
Section 10 of the Senate amendment makes persons who
breach a warranty or fail to comply with the bill, or
regulations under the bill, liable for the lesser of the amount
of the loss or the amount of the substitute check plus interest
and expenses. This section applies a comparative negligence
standard for the determination of damages.
The amendment also provides that nothing in the
comparative negligence provision of section 10(b)(1) reduces
consumer's rights under other laws.
Conference Agreement
The House recedes to the Senate.
Statute of Limitations and Notice of Claim
House Bill
Section 10 of the House bill provides for a 1 year
statute of limitations from the time that the customer learns
of the claim.
Senate Amendment
Section 11 of the Senate amendment provides for a 1 year
statute of limitations from the time that the customer learns
of the claim.
Conference Agreement
This provision is not in disagreement.
Consumer Awareness
House Bill
Section 11 of the House bill requires that each bank
provide notice to its customers describing the process of check
substitution and a description of the consumer recredit
provision. This section applies to both new and existing
customers.
Senate Amendment
Section 12 of the Senate amendment states that notice to
consumers only has to be sent if consumers get their original
checks or substitute checks back in their periodic statements.
Banks also must provide notice to customers that request
a copy of a check and receive a substitute check from the bank.
Banks must provide customers that receive original checks
or substitute checks with a brief informative notice for the
first three years that the Act is in effect.
Conference Agreement
The Conference Agreement adopts the House position
regarding the permanence of the consumer notice provisions.
The Conference Agreement also merges language from Senate
section 12(b)(1)(C) and House section 11(b). The Conference
Agreement adopts the Senate provision regarding the 9 month
time frame within which the FRB must publish model language and
requiring notice to include (i) description of substitute check
process; and (ii) description of consumer recredit rights.
Effect on Other Law
House Bill
Section 12 of the House bill supersedes any inconsistent
Federal or State laws to the extent of the inconsistency.
Senate Amendment
Section 13 of the Senate amendment supersedes any
inconsistent Federal or State laws to the extent of the
inconsistency.
Conference Agreement
This provision is not in disagreement.
Variation by Agreement
House Bill
Section 13 of the House bill permits provisions of
section 7 to be varied by the banks involved.
Senate Amendment
Section 17 of the Senate amendment permits provisions of
section 8 to be varied by the banks involved.
Conference Agreement
The Conference Agreement makes only technical changes
related to cross-references and maintains the substance of both
provisions.
Regulations
House Bill
Section 14 of the House bill allows the Federal Reserve
to write regulations related to the operation of this
legislation. Additionally, the Federal Reserve is required to
report on the increased speed of check processing and the
prices it charges for transportation services.
Senate Amendment
Sections 14 and 15 of the Senate amendment allows the
Federal Reserve to regulate the operation of this legislation.
However, it differs in the study and monitoring of funds
available. The Senate amendment mandates a study of
implementation of the Act, including impact on funds
availability.
Conference Agreement
The Conference Agreement adopts the Senate provisions
regarding the authority of the Federal Reserve to issue
regulations as it deems necessary to implement, prevent,
circumvent or evasion of, or facilitate compliance with the
legislation and the reporting requirements.
The Conferees also agree to a provision which requires
the Federal Reserve Board to publish statistical data on costs
and revenue related to transporting commercial checks
(exclusive of the checks the reserve banks handle as fiscal
agents) between Federal Reserve Bank offices by air or ground
couriers. In the past, such statistics have been of interest to
certain organizations. This provision does not mandate specific
methodologies for imputing or estimating revenues. Further,
this section does not change the Monetary Control Act's
requirement that the Federal Reserve Banks, over the long run,
recover the costs of their priced services or affect the
Federal Reserve Board's ability under its pricing principles to
determine what constitutes a major service category.
The House recedes to the Senate on a funds availability
study.
Evaluation and Report by the Comptroller General
House Bill
The House bill contains no similar provision.
Senate Amendment
Section 16 of the Senate amendment provides for the
Comptroller General of the United States to evaluate the
implementation and administration of this bill within 5 years.
Conference Agreement
The House recedes to the Senate.
Depositary Services Efficiency and Cost Reduction
House Bill
The House bill contains no similar provision.
Senate Amendment
The Senate amendment contains no similar provision.
Conference Agreement
The Conference Agreement includes language requested by
the Department of Treasury which authorizes the Treasury
Department to directly compensate financial institutions that
provide depositary services to the Federal Government.
Additionally, the Conference Agreement includes language
requested by the Federal Reserve Board to effect technical
changes to the Federal Reserve Act in the way currency is
collateralized which will allow for greater liquidity in case
of a national emergency.
Effective Date
House Bill
Section 15 establishes the effective date as 18 months
after the date of enactment.
Senate Amendment
Section 18 establishes the effective date as 12 months
after the date of enactment.
Conference Agreement
The House recedes to the Senate.
For consideration of the House bill and the
Senate amendment, and modifications committed
to conference:
Michael G. Oxley,
Spencer Bachus,
Steven C. LaTourette,
Melissa A. Hart,
Patrick J. Tiberi,
Barney Frank,
Harold E. Ford, Jr.,
Managers on the Part of the House.
Richard C. Shelby,
Robert F. Bennett,
Wayne Allard,
Paul S. Sarbanes,
Tim Johnson,
Managers on the Part of the Senate.