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Old 10-26-2004, 10:56 AM
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Default Check 21: new US legislation for personal checking

Posted By: warshawlaw

The reason for holds is to give the bank time to contact us about bad checks, cancelled checks, etc., not for the banks to formally clear the items. Big secret: for years the Fed has cleared checks within 24-48 hours at the institutional level, meaning that the $$ have been there for the taking by the banks within a day or two of their tendering the items to the Fed for their region. I got a notice about this law from my bank at the office. The law allows the banks to forward electronic reproductions of checks to get them paid (i.e., Wells Fargo can email a check image to Citibank for payment rather than having to send over the real item through the Fed), which enables items to truly clear in 24 hours. What it does not do is increase the speed of the snail mail notice of a bad check that then is sent out by the bank. I am going to continue to hold check-paid shipments for a week before I ship.

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