Rep. Carolyn B. Maloney (D-N.Y.), a member of the House Financial Services Committee, has sponsored H.R. 5410, the Consumer Checking Account Fairness Act (CCAF), which was written to "redress imbalances" between the speed of withdrawals under Check 21 and the slower speed of crediting deposits. "Constituents are asking me, 'Why is it taking so long?'" says Maloney.
Check 21 requires the Federal Reserve to report back to Congress in April 2007 on the change in length of hold times. But the CCAF Act would accelerate that process and instruct the Fed to reduce hold times. "Our institutions can now process the checks that we write electronically and deduct that money from consumers' accounts immediately," says Maloney. "Why are some of these banks allowed to hold the checks we deposit for days?"
However, banks have yet to take full advantage of the provisions of Check 21. In fact, the largest banks have taken a slow, measured approach toward creating and sending image replacement documents, or IRDs. "There have been very low volumes - in the hundreds, not the thousands - for the biggest banks that we work with," says Steve Hill, managing principal, global payments consulting, Carreker Corp. (Dallas).
As a result, industry participants would prefer that the Federal Reserve conduct research on the impact of Check 21 before new legislation is enacted. "It's important to let the Fed do its study," says Danne Buchanan, chief executive officer, NetDeposit (Salt Lake City). "If [the Fed finds that] banks are being unjustly rewarded by keeping old hold times, they're going to shorten those windows."