Page 1587 TITLE 12BANKS AND BANKING 4001

3912. Repealed. Pub. L. 104208, div. A, title II, depository institutions exchange deposited
2224(c), Sept. 30, 1996, 110 Stat. 3009415 checks on a local basis, including an entire
metropolitan area, without using the check
Section, Pub. L. 98181, title IX, 913, Nov. 30, 1983, 97
Stat. 1284; Pub. L. 100418, title III, 3121(e), Aug. 23,
processing facilities of the Federal Reserve
1988, 102 Stat. 1379, directed Secretary of the Treasury System.
and certain Federal banking agencies to report to Con- (9) Check processing region
gress, no later than 6 months after Nov. 30, 1983, regard-
The term check processing region means
ing changes that could improve international lending
operations of banking institutions. the geographical area served by a Federal Re-
serve bank check processing center or such
CHAPTER 41EXPEDITED FUNDS larger area as the Board may prescribe by reg-
AVAILABILITY ulations.
Sec. (10) Consumer account
4001. Definitions. The term consumer account means any
4002. Expedited funds availability schedules. account used primarily for personal, family, or
4003. Safeguard exceptions.
4004. Disclosure of funds availability policies. household purposes.
4005. Payment of interest. (11) Depository check
4006. Miscellaneous provisions.
4007. Effect on State law. The term depository check means any
4008. Regulations and reports by Board. cashiers check, certified check, tellers check,
4009. Administrative enforcement. and any other functionally equivalent instru-
4010. Civil liability. ment as determined by the Board.
4001. Definitions (12) Depository institution
The term depository institution has the
For purposes of this chapter
meaning given such term in clauses (i)
(1) Account through (vi) of section 461(b)(1)(A) of this title.
The term account means a demand de- Such term also includes an office, branch, or
posit account or other similar transaction ac- agency of a foreign bank located in the United
count at a depository institution. States.
(2) Board (13) Local originating depository institution
The term Board means the Board of Gov- The term local originating depository in-
ernors of the Federal Reserve System. stitution means any originating depository
(3) Business day institution which is located in the same check
The term business day means any day processing region as the receiving depository
other than a Saturday, Sunday, or legal holi- institution.
day. (14) Noncash item
(4) Cash The term noncash item means
The term cash means United States coins (A) a check or other demand item to which
and currency, including Federal Reserve a passbook, certificate, or other document is
notes. attached;
(B) a check or other demand item which is
(5) Cashiers check
accompanied by special instructions, such as
The term cashiers check means any a request for special advise of payment or
check which dishonor; or
(A) is drawn on a depository institution; (C) any similar item which is otherwise
(B) is signed by an officer or employee of classified as a noncash item in regulations of
such depository institution; and the Board.
(C) is a direct obligation of such deposi-
(15) Nonlocal originating depository institution
tory institution.
(6) Certified check The term nonlocal originating depository
institution means any originating depository
The term certified check means any check institution which is not a local depository in-
with respect to which a depository institution stitution.
certifies that
(16) Proprietary ATM
(A) the signature on the check is genuine;
and The term proprietary ATM means an
(B) such depository institution has set automated teller machine which is
aside funds which (A) located
(i) are equal to the amount of the check; (i) at or adjacent to a branch of the re-
and ceiving depository institution; or
(ii) will be used only to pay such check. (ii) in close proximity, as defined by the
(7) Check Board, to a branch of the receiving deposi-
tory institution; or
The term check means any negotiable de-
mand draft drawn on or payable through an of- (B) owned by, operated exclusively for, or
fice of a depository institution located in the operated by the receiving depository institu-
United States. Such term does not include tion.
noncash items. (17) Originating depository institution
(8) Check clearinghouse association The term originating depository institu-
The term check clearinghouse association tion means the branch of a depository insti-
means any arrangement by which participant tution on which a check is drawn.
 4002 TITLE 12BANKS AND BANKING Page 1588

(18) Nonproprietary ATM notes under this section and section 248a of this title]
may be cited as the Expedited Funds Availability
The term nonproprietary ATM means an Act.
automated teller machine which is not a pro-
prietary ATM. SEPARABILITY
(19) Participant If any provision of Pub. L. 10086 or the application
thereof to any person or circumstances is held invalid,
The term participant means a depository the remainder of Pub. L. 10086 and the application of
institution which the provision to other persons not similarly situated or
(A) is located in the same geographic area to other circumstances not to be affected thereby, see
as that served by a check clearinghouse as- section 1205 of Pub. L. 10086, set out as a note under
sociation; and section 226 of this title.
(B) exchanges checks through the check 4002. Expedited funds availability schedules
clearinghouse association, either directly or
through an intermediary. (a) Next business day availability for certain de-
posits
(20) Receiving depository institution
(1) Cash deposits; wire transfers
The term receiving depository institution
means the branch of a depository institution Except as provided in subsection (e) of this
or the proprietary ATM in which a check is section and in section 4003 of this title, in any
first deposited. case in which
(A) any cash is deposited in an account at
(21) State a receiving depository institution staffed by
The term State means any State, the Dis- individuals employed by such institution, or
trict of Columbia, the Commonwealth of Puer- (B) funds are received by a depository in-
to Rico, or the Virgin Islands. stitution by wire transfer for deposit in an
(22) Tellers check account at such institution,
The term tellers check means any check such cash or funds shall be available for with-
issued by a depository institution and drawn drawal not later than the business day after
on another depository institution. the business day on which such cash is depos-
(23) United States ited or such funds are received for deposit.
(2) Government checks; certain other checks
The term United States means the several
States, the District of Columbia, the Common- Funds deposited in an account at a deposi-
wealth of Puerto Rico, and the Virgin Islands. tory institution by check shall be available for
withdrawal not later than the business day
(24) Unit of general local government
after the business day on which such funds are
The term unit of general local govern- deposited in the case of
ment means any city, county, town, town- (A) a check which
ship, parish, village, or other general purpose (i) is drawn on the Treasury of the
political subdivision of a State. United States; and
(25) Wire transfer (ii) is endorsed only by the person to
whom it was issued;
The term wire transfer has such meaning
as the Board shall prescribe by regulations. (B) a check which
(i) is drawn by a State;
(Pub. L. 10086, title VI, 602, Aug. 10, 1987, 101
(ii) is deposited in a receiving depository
Stat. 635.)
institution which is located in such State
REFERENCES IN TEXT and is staffed by individuals employed by
This chapter, referred to in text, was in the original such institution;
this title, meaning title VI of Pub. L. 10086, Aug. 10, (iii) is deposited with a special deposit
1987, 101 Stat. 635, known as the Expedited Funds Avail- slip which indicates it is a check drawn by
ability Act, which enacted this chapter, amended sec- a State; and
tion 248a of this title, and enacted provisions set out as (iv) is endorsed only by the person to
notes under sections 248a and 4001 of this title. For whom it was issued;
complete classification of this Act to the Code, see
Short Title note below and Tables. (C) a check which
(i) is drawn by a unit of general local
EFFECTIVE DATE
government;
Section 613 of title VI of Pub. L. 10086 provided that: (ii) is deposited in a receiving depository
(a) DATE OF ENACTMENT.Except as provided in sub- institution which is located in the same
section (b), this title [enacting this chapter, amending State as such unit of general local govern-
section 248a of this title, and enacting provisions set
ment and is staffed by individuals em-
out as notes under this section and section 248a of this
title] shall take effect on the date of the enactment of ployed by such institution;
this title [Aug. 10, 1987]. (iii) is deposited with a special deposit
(b) 1 YEAR AFTER DATE OF ENACTMENT.Sections slip which indicates it is a check drawn by
603, 604, 605, 606, 610, and 611 [enacting sections 4002 to a unit of general local government; and
4005, 4009, and 4010 of this title] shall take effect on Sep- (iv) is endorsed only by the person to
tember 1, 1988. whom it was issued;
SHORT TITLE (D) the first $100 deposited by check or
Section 601 of title VI of Pub. L. 10086 provided that: checks on any one business day;
This title [enacting this chapter, amending section (E) a check deposited in a branch of a de-
248a of this title, and enacting provisions set out as pository institution and drawn on the same
Page 1589 TITLE 12BANKS AND BANKING 4002

or another branch of the same depository in- the amount available under subsection
stitution if both such branches are located (a)(2)(D) of this section.
in the same State or the same check proc- (4) Applicability
essing region;
This subsection shall apply with respect to
(F) a cashiers check, certified check, tell-
ers check, or depository check which funds deposited by check in an account at a
(i) is deposited in a receiving depository depository institution on or after September 1,
institution which is staffed by individuals 1990, except that the Board may, by regula-
employed by such institution; tion, make this subsection or any part of this
(ii) is deposited with a special deposit subsection applicable earlier than September
slip which indicates it is a cashiers check, 1, 1990.
certified check, tellers check, or deposi- (c) Temporary schedule
tory check, as the case may be; and (1) Availability of local checks
(iii) is endorsed only by the person to (A) In general
whom it was issued.
Subject to subparagraph (B) of this para-
(b) Permanent schedule
graph, subsections (a)(2), (d), and (e) of this
(1) Availability of funds deposited by local section, and section 4003 of this title, not
checks more than 2 business days shall intervene
Subject to paragraph (3) of this subsection, between the business day on which funds are
subsections (a)(2), (d), and (e) of this section, deposited in an account at a depository in-
and section 4003 of this title, not more than 1 stitution by a check drawn on a local origi-
business day shall intervene between the busi- nating depository institution and the busi-
ness day on which funds are deposited in an ness day on which such funds are available
account at a depository institution by a check for withdrawal.
drawn on a local originating depository insti- (B) Time period adjustment for cash with-
tution and the business day on which the drawal of certain checks
funds involved are available for withdrawal.
(i) In general
(2) Availability of funds deposited by nonlocal
checks Except as provided in clause (ii), funds
deposited in an account in a depository in-
Subject to paragraph (3) of this subsection, stitution by check drawn on a local deposi-
subsections (a)(2), (d), and (e) of this section, tory institution that is not a participant
and section 4003 of this title, not more than 4 in the same check clearinghouse associa-
business days shall intervene between the tion as the receiving depository institu-
business day on which funds are deposited in tion (other than a check described in sub-
an account at a depository institution by a
section (a)(2) of this section) shall be avail-
check drawn on a nonlocal originating deposi-
able for cash withdrawal not later than the
tory institution and the business day on which
business day after the business day on
such funds are available for withdrawal.
which such funds otherwise are available
(3) Time period adjustments for cash with- under subparagraph (A).
drawal of certain checks
(ii) 5 p.m. cash availability
(A) In general
Not more than $400 (or the maximum
Except as provided in subparagraph (B), amount allowable in the case of a with-
funds deposited in an account in a deposi- drawal from an automated teller machine
tory institution by check (other than a but not more than $400) of funds deposited
check described in subsection (a)(2) of this by one or more checks to which this sub-
section) shall be available for cash with- paragraph applies shall be available for
drawal not later than the business day after cash withdrawal not later than 5 oclock
the business day on which such funds other-
post meridian of the business day on which
wise are available under paragraph (1) or (2).
such funds are available under subpara-
(B) 5 p.m. cash availability graph (A).
Not more than $400 (or the maximum (iii) $100 availability
amount allowable in the case of a with-
Any amount available for withdrawal
drawal from an automated teller machine
under this subparagraph shall be in addi-
but not more than $400) of funds deposited by
tion to the amount available under sub-
one or more checks to which this paragraph
section (a)(2)(D) of this section.
applies shall be available for cash with-
drawal not later than 5 oclock post merid- (2) Availability of nonlocal checks
ian of the business day on which such funds Subject to subsections (a)(2), (d), and (e) of
are available under paragraph (1) or (2). If this section and section 4003 of this title, not
funds deposited by checks described in both more than 6 business days shall intervene be-
paragraph (1) and paragraph (2) become tween the business day on which funds are de-
available for cash withdrawal under this posited in an account at a depository institu-
paragraph on the same business day, the tion by a check drawn on a nonlocal originat-
limitation contained in this subparagraph ing depository institution and the business
shall apply to the aggregate amount of such day on which such funds are available for
funds. withdrawal.
(C) $100 availability (3) Applicability
Any amount available for withdrawal This subsection shall apply with respect to
under this paragraph shall be in addition to funds deposited by check in an account at a
 4002 TITLE 12BANKS AND BANKING Page 1590

depository institution after August 31, 1988, maintain a dialogue with depository institu-
and before September 1, 1990, except as may be tions and their suppliers on the computer soft-
otherwise provided under subsection (b)(4) of ware and hardware available for use by auto-
this section. mated teller machines, and shall, not later
(d) Time period adjustments than September 1 of each of the first 3 cal-
(1) Reduction generally endar years beginning after August 10, 1987, re-
port to the Congress regarding such software
Notwithstanding any other provision of law, and hardware and regarding the potential for
the Board shall, by regulation, reduce the improving the processing of automated teller
time periods established under subsections (b), machine deposits.
(c), and (e) of this section to as short a time as
possible and equal to the period of time (f) Check return; notice of nonpayment
achievable under the improved check clearing No provision of this section shall be construed
system for a receiving depository institution as requiring that, with respect to all checks de-
to reasonably expect to learn of the non- posited in a receiving depository institution
payment of most items for each category of (1) such checks be physically returned to
checks. such depository institution; or
(2) Extension for certain deposits in noncontig- (2) any notice of nonpayment of any such
uous States or territories check be given to such depository institution
Notwithstanding any other provision of law, within the times set forth in subsection (a),
any time period established under subsection (b), (c), or (e) of this section or in the regula-
(b), (c), or (e) of this section shall be extended tions issued under any such subsection.
by 1 business day in the case of any deposit (Pub. L. 10086, title VI, 603, Aug. 10, 1987, 101
which is both Stat. 637; Pub. L. 101625, title X, 1001, Nov. 28,
(A) deposited in an account at a depository 1990, 104 Stat. 4424; Pub. L. 102242, title II,
institution which is located in Alaska, Ha- 227(a), (b)(1), Dec. 19, 1991, 105 Stat. 2307; Pub. L.
waii, Puerto Rico, or the Virgin Islands; and 111203, title X, 1086(a), (e), July 21, 2010, 124
(B) deposited by a check drawn on an orig- Stat. 2085, 2086.)
inating depository institution which is not
located in the same State, commonwealth, AMENDMENT OF SECTION
or territory as the receiving depository in- Pub. L. 111203, title X, 1086(a), (e), 1100H,
stitution. July 21, 2010, 124 Stat. 2085, 2086, 2113, provided
(e) Deposits at ATM that, effective on the designated transfer date,
(1) Nonproprietary ATM this section is amended:
(1) in subsection (a)(2)(D), by substituting
(A) In general
$200 for $100;
Not more than 4 business days shall inter- (2) in subsections (b)(3)(C) and (c)(1)(B)(iii),
vene between the business day a deposit de- in the headings, by substituting $200 for
scribed in subparagraph (B) is made at a $100; and
nonproprietary automated teller machine (3) in subsection (d)(1), by inserting , jointly
(for deposit in an account at a depository in- with the Director of the Bureau of Consumer
stitution) and the business day on which Financial Protection, after Board.
funds from such deposit are available for See Effective Date of 2010 Amendment note
withdrawal. below.
(B) Deposits described in this paragraph 1
AMENDMENTS
A deposit is described in this subparagraph
1991Subsec. (e)(1). Pub. L. 102242, 227(b)(1)(A),
if it is
struck out temporary schedule after ATM in
(i) a cash deposit; heading.
(ii) a deposit made by a check described Subsec. (e)(1)(C). Pub. L. 102242, 227(a), struck out
in subsection (a)(2) of this section; subpar. (C) which read as follows: This paragraph shall
(iii) a deposit made by a check drawn on apply with respect to funds deposited at a nonpropri-
a local originating depository institution etary automated teller machine after August 31, 1988,
(other than a check described in sub- and prior to the expiration of the 2-year period begin-
section (a)(2) of this section); or ning on November 28, 1990.
(iv) a deposit made by a check drawn on Subsec. (e)(2) to (4). Pub. L. 102242, 227(a), (b)(1)(B),
a nonlocal originating depository institu- redesignated pars. (3) and (4) as (2) and (3), respectively,
tion (other than a check described in sub- and struck out former par. (2) which related to perma-
nent schedule for funds deposited at nonproprietary
section (a)(2) of this section).
automated teller machines.
(2) Proprietary ATMtemporary and perma- 1990Subsec. (e)(1)(A). Pub. L. 101625, 1001(1), sub-
nent schedules stituted 4 for 6.
The provisions of subsections (a), (b), and (c) Subsec. (e)(1)(C). Pub. L. 101625, 1001(2), substituted
prior to the expiration of the 2-year period beginning
of this section shall apply with respect to any
on November 28, 1990 for before September 1, 1990.
funds deposited at a proprietary automated Subsec. (e)(2)(D). Pub. L. 101625, 1001(3), substituted
teller machine for deposit in an account at a the expiration of the 2-year period beginning on No-
depository institution. vember 28, 1990 for September 1, 1990.
(3) Study and report on ATMs EFFECTIVE DATE OF 2010 AMENDMENT
The Board shall, either directly or through
Amendment by Pub. L. 111203 effective on the des-
the Consumer Advisory Council, establish and ignated transfer date, see section 1100H of Pub. L.
111203, set out as a note under section 552a of Title 5,
1 So in original. Probably should be subparagraph. Government Organization and Employees.
Page 1591 TITLE 12BANKS AND BANKING 4003

EFFECTIVE DATE (1) the amount of deposits by one or more

Section effective Sept. 1, 1988, see section 613(b) of checks that exceeds the amount of $5,000 in
Pub. L. 10086, set out as a note under section 4001 of any one day;
this title. (2) checks that have been returned unpaid
and redeposited; and
4003. Safeguard exceptions (3) deposit accounts which have been over-
(a) New accounts drawn repeatedly.
Notwithstanding section 4002 of this title, in (c) Reasonable cause exception
the case of any account established at a deposi- (1) In general
tory institution by a new depositor, the follow- In accordance with regulations which the
ing provisions shall apply with respect to any Board shall prescribe, subsections (a)(2), (b),
deposit in such account during the 30-day period (c), and (e) of section 4002 of this title shall not
(or such shorter period as the Board may estab- apply with respect to any check deposited in
lish) beginning on the date such account is es- an account at a depository institution if the
tablished receiving depository institution has reason-
(1) Next business day availability of cash and able cause to believe that the check is un-
certain items collectible from the originating depository in-
Except as provided in paragraph (3), in the stitution. For purposes of the preceding sen-
case of tence, reasonable cause to believe requires the
(A) any cash deposited in such account; existence of facts which would cause a well-
(B) any funds received by such depository grounded belief in the mind of a reasonable
institution by wire transfer for deposit in person. Such reasons shall be included in the
such account; notice required under subsection (f) of this
(C) any funds deposited in such account by section.
cashiers check, certified check, tellers (2) Basis for determination
check, depository check, or travelers check;
No determination under this subsection may
and
be based on any class of checks or persons.
(D) any funds deposited by a government
check which is described in subparagraph (3) Overdraft fees
(A), (B), or (C) of section 4002(a)(2) of this If the receiving depository institution deter-
title, mines that a check deposited in an account is
such cash or funds shall be available for with- a check described in paragraph (1), the receiv-
drawal on the business day after the business ing depository institution shall not assess any
day on which such cash or funds are deposited fee for any subsequent overdraft with respect
or, in the case of a wire transfer, on the busi- to such account, if
ness day after the business day on which such (A) the depositor was not provided with
funds are received for deposit. the written notice required under subsection
(f) of this section (with respect to such de-
(2) Availability of other items termination) at the time the deposit was
In the case of any funds deposited in such ac- made;
count by a check (other than a check de- (B) the overdraft would not have occurred
scribed in subparagraph (C) or (D) of para- but for the fact that the funds so deposited
graph (1)), the availability for withdrawal of are not available; and
such funds shall not be subject to the provi- (C) the amount of the check is collected
sions of section 4002(b), 4002(c), or paragraphs 1 from the originating depository institution.
(1) of section 4002(e) of this title. (4) Compliance
(3) Limitation relating to certain checks in ex-
Each agency referred to in section 4009(a) of
cess of $5,000
this title shall monitor compliance with the
In the case of funds deposited in such ac- requirements of this subsection in each regu-
count during such period by checks described lar examination of a depository institution
in subparagraph (C) or (D) of paragraph (1) the and shall describe in each report to the Con-
aggregate amount of which exceeds $5,000 gress the extent to which this subsection is
(A) paragraph (1) shall apply only with re- being complied with. For the purpose of this
spect to the first $5,000 of such aggregate paragraph, each depository institution shall
amount; and retain a record of each notice provided under
(B) not more than 8 business days shall in- subsection (f) of this section as a result of the
tervene between the business day on which application of this subsection.
any such funds are deposited and the busi-
(d) Emergency conditions
ness day on which such excess amount shall
be available for withdrawal. Subject to such regulations as the Board may
prescribe, subsections (a)(2), (b), (c), and (e) of
(b) Large or redeposited checks; repeated over-
section 4002 of this title shall not apply to funds
drafts
deposited by check in any receiving depository
The Board may, by regulation, establish rea- institution in the case of
sonable exceptions to any time limitation estab- (1) any interruption of communication fa-
lished under subsection (a)(2), (b), (c), or (e) of cilities;
section 4002 of this title for (2) suspension of payments by another depos-
itory institution;
1 So in original. Probably should be paragraph. (3) any war; or
 4003 TITLE 12BANKS AND BANKING Page 1592

(4) any emergency condition beyond the con- (2) Time for notice
trol of the receiving depository institution, The notice required under paragraph (1)(A)
if the receiving depository institution exercises with respect to a deposit to which an excep-
such diligence as the circumstances require. tion contained in this section applies shall be
(e) Prevention of fraud losses made by the time provided in the following
subparagraphs:
(1) In general
(A) In the case of a deposit made in person
The Board may, by regulation or order, sus- by the depositor at the receiving depository
pend the applicability of this chapter, or any institution, the depository institution shall
portion thereof, to any classification of checks immediately provide such notice in writing
if the Board determines that to the depositor.
(A) depository institutions are experienc- (B) In the case of any other deposit (other
ing an unacceptable level of losses due to than a deposit described in subparagraph
check-related fraud, and (C)), the receiving depository institution
(B) suspension of this chapter, or such por- shall mail the notice to the depositor not
tion of this chapter, with regard to the clas- later than the close of the next business day
sification of checks involved in such fraud is following the business day on which the de-
necessary to diminish the volume of such posit is received.
fraud. (C) In the case of a deposit to which sub-
(2) Sunset provision section (d) or (e) of this section applies, no-
No regulation prescribed or order issued tice shall be provided by the depository in-
under paragraph (1) shall remain in effect for stitution in accordance with regulations of
more than 45 days (excluding Saturdays, Sun- the Board.
days, legal holidays, or any day either House (D) In the case of a deposit to which sub-
of Congress is not in session). section (b)(1) or (b)(2) of this section applies,
the depository institution may, for noncon-
(3) Report to Congress
sumer accounts and other classes of ac-
(A) Notice of each suspension counts, as defined by the Board, that gener-
Within 10 days of prescribing any regula- ally have a large number of such deposits,
tion or issuing any order under paragraph provide notice at or before the time it first
(1), the Board shall transmit a report of such determines that the subsection applies.
action to the Committee on Banking, Fi- (E) In the case of a deposit to which sub-
nance and Urban Affairs of the House of Rep- section (b)(3) of this section applies, the de-
resentatives and the Committee on Banking, pository institution may, subject to regula-
Housing, and Urban Affairs of the Senate. tions of the Board, provide notice at the be-
(B) Contents of report ginning of each time period it determines
that the subsection applies. In addition to
Each report under subparagraph (A) shall
the requirements contained in paragraph
contain
(1)(A), the notice shall specify the time pe-
(i) the specific reason for prescribing the
riod for which the exception will apply.
regulation or issuing the order;
(ii) evidence considered by the Board in (3) Subsequent determinations
making the determination under para- If the facts upon which the determination of
graph (1) with respect to such regulation the applicability of an exception contained in
or order; and subsection (b) or (c) of this section to any de-
(iii) specific examples of the check-relat- posit only become known to the receiving de-
ed fraud giving rise to such regulation or pository institution after the time notice is
order. required under paragraph (2) with respect to
(f) Notice of exception; availability within rea- such deposit, the depository institution shall
sonable time mail such notice to the depositor as soon as
(1) In general practicable, but not later than the first busi-
ness day following the day such facts become
If any exception contained in this section known to the depository institution.
(other than subsection (a) of this section) ap-
plies with respect to funds deposited in an ac- (Pub. L. 10086, title VI, 604, Aug. 10, 1987, 101
count at a depository institution Stat. 642; Pub. L. 102242, title II, 225, 227(b)(2),
(A) the depository institution shall pro- Dec. 19, 1991, 105 Stat. 2307, 2308; Pub. L. 111203,
vide notice in the manner provided in para- title X, 1086(b), July 21, 2010, 124 Stat. 2085.)
graph (2) of AMENDMENT OF SECTION
(i) the time period within which the
Pub. L. 111203, title X, 1086(b), 1100H, July
funds shall be made available for with-
21, 2010, 124 Stat. 2085, 2113, provided that, ef-
drawal; and
fective on the designated transfer date, this sec-
(ii) the reason the exception was in-
tion is amended:
voked; and
(1) by inserting , jointly with the Director of
(B) except where other time periods are the Bureau of Consumer Financial Protection,
specifically provided in this chapter, the after Board wherever appearing, other than
availability of the funds deposited shall be in subsection (f); and
governed by the policy of the receiving de- (2) in subsection (f), by substituting Board,
pository institution, but shall not exceed a jointly with the Director of the Bureau of Con-
reasonable period of time as determined by sumer Financial Protection. for Board.
the Board. wherever appearing.
Page 1593 TITLE 12BANKS AND BANKING 4004

See Effective Date of 2010 Amendment note plementing any change to the depository in-
below. stitutions policy with respect to when cus-
AMENDMENTS
tomers may withdraw funds deposited into
consumer accounts, except that any change
1991Subsec. (a)(2). Pub. L. 102242, 227(b)(2), struck which expedites the availability of such funds
out and (2) after paragraphs (1). shall be disclosed not later than 30 days after
Subsec. (b). Pub. L. 102242, 225(1), inserted (a)(2),
after subsection.
implementation.
Subsec. (c)(1). Pub. L. 102242, 225(2), substituted (3) Upon request
(a)(2) for (a)(2)(F). Upon the request of any person, a depository
Subsec. (d). Pub. L. 102242, 225(3), inserted (a)(2), institution shall provide or send such person a
after subsections.
written notice containing the specific policy
Subsec. (f)(1)(A)(i). Pub. L. 102242, 225(4), sub-
stituted time period within which for day. of such depository institution with respect to
Subsec. (f)(2)(D), (E). Pub. L. 102242, 225(5), added when a customer may withdraw funds depos-
subpars. (D) and (E). ited into a customers account.
CHANGE OF NAME (d) Posting of notice
(1) Specific notice at manned teller stations
Committee on Banking, Finance and Urban Affairs of
House of Representatives treated as referring to Com- Each depository institution shall post, in a
mittee on Banking and Financial Services of House of conspicuous place in each location where de-
Representatives by section 1(a) of Pub. L. 10414, set posits are accepted by individuals employed by
out as a note preceding section 21 of Title 2, The Con- such depository institution, a specific notice
gress. Committee on Banking and Financial Services of which describes the time periods applicable to
House of Representatives abolished and replaced by the availability of funds deposited in a con-
Committee on Financial Services of House of Rep-
sumer account.
resentatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally trans- (2) General notice at automated teller ma-
ferred from Committee on Energy and Commerce of chines
House of Representatives by House Resolution No. 5, In the case of any automated teller machine
One Hundred Seventh Congress, Jan. 3, 2001. at which any funds are received for deposit in
EFFECTIVE DATE OF 2010 AMENDMENT an account at any depository institution, the
Amendment by Pub. L. 111203 effective on the des- Board shall prescribe, by regulations, that the
ignated transfer date, see section 1100H of Pub. L. owner or operator of such automated teller
111203, set out as a note under section 552a of Title 5, machine shall post or provide a general notice
Government Organization and Employees. that funds deposited in such machine may not
EFFECTIVE DATE be immediately available for withdrawal.
(e) Notice of interest payment policy
Section effective Sept. 1, 1988, see section 613(b) of
Pub. L. 10086, set out as a note under section 4001 of If a depository institution described in section
this title. 4005(b) of this title begins the accrual of interest
or dividends at a later date than the date de-
4004. Disclosure of funds availability policies scribed in section 4005(a) of this title with re-
(a) Notice for new accounts spect to all funds, including cash, deposited in
Before an account is opened at a depository in- an interest-bearing account at such depository
stitution, the depository institution shall pro- institution, any notice required to be provided
vide written notice to the potential customer of under subsections (a) and (c) of this section shall
the specific policy of such depository institution contain a written description of the time at
with respect to when a customer may withdraw which such depository institution begins to ac-
funds deposited into the customers account. crue interest or dividends on such funds.
(b) Preprinted deposit slips (f) Model disclosure forms
(1) Prepared by Board
All preprinted deposit slips that a depository
institution furnishes to its customers shall con- The Board shall publish model disclosure
tain a summary notice, as prescribed by the forms and clauses for common transactions to
Board in regulations, that deposited items may facilitate compliance with the disclosure re-
not be available for immediate withdrawal. quirements of this section and to aid cus-
tomers by utilizing readily understandable
(c) Mailing of notice
language.
(1) First mailing after enactment
(2) Use of forms to achieve compliance
In the first regularly scheduled mailing to A depository institution shall be deemed to
customers occurring after September 1, 1988, be in compliance with the requirements of this
but not more than 60 days after September 1, section if such institution
1988, each depository institution shall send a (A) uses any appropriate model form or
written notice containing the specific policy clause as published by the Board, or
of such depository institution with respect to (B) uses any such model form or clause and
when a customer may withdraw funds depos- changes such form or clause by
ited into such customers account, unless the (i) deleting any information which is not
depository institution has provided a disclo- required by this chapter; or
sure which meets the requirements of this sec- (ii) rearranging the format.
tion before September 1, 1988. (3) Voluntary use
(2) Subsequent changes Nothing in this chapter requires the use of
A depository institution shall send a written any such model form or clause prescribed by
notice to customers at least 30 days before im- the Board under this subsection.
 4005 TITLE 12BANKS AND BANKING Page 1594

(4) Notice and comment EFFECTIVE DATE

Model disclosure forms and clauses shall be Section effective Sept. 1, 1988, see section 613(b) of
adopted by the Board only after notice duly Pub. L. 10086, set out as a note under section 4001 of
given in the Federal Register and an oppor- this title.
tunity for public comment in accordance with 4006. Miscellaneous provisions
section 553 of title 5.
(a) After-hours deposits
(Pub. L. 10086, title VI, 605, Aug. 10, 1987, 101
Stat. 644; Pub. L. 111203, title X, 1086(c), July For purposes of this chapter, any deposit
21, 2010, 124 Stat. 2086.) which is made on a Saturday, Sunday, legal hol-
iday, or after the close of business on any busi-
AMENDMENT OF SECTION ness day shall be deemed to have been made on
Pub. L. 111203, title X, 1086(c), 1100H, July the next business day.
21, 2010, 124 Stat. 2085, 2113, provided that, ef- (b) Availability at start of business day
fective on the designated transfer date, this sec-
tion is amended: Except as provided in subsections (b)(3) and
(1) by inserting , jointly with the Director of (c)(1)(B) of section 4002 of this title, if any provi-
the Bureau of Consumer Financial Protection, sion of this chapter requires that funds be avail-
after Board wherever appearing, other than able for withdrawal on any business day, such
in the heading for subsection (f)(1); and funds shall be available for withdrawal at the
(2) in subsection (f)(1), in the heading, by in- start of such business day.
serting and Bureau after Board. (c) Effect on policies of depository institutions
See Effective Date of 2010 Amendment note No provision of this chapter shall be construed
below. as
REFERENCES IN TEXT (1) prohibiting a depository institution from
making funds available for withdrawal in a
After enactment, referred to in the heading of subsec.
(c)(1), probably means after the effective date of this
shorter period of time than the period of time
section, which is Sept. 1, 1988. required by this chapter; or
(2) affecting a depository institutions
EFFECTIVE DATE OF 2010 AMENDMENT right
Amendment by Pub. L. 111203 effective on the des- (A) to accept or reject a check for deposit;
ignated transfer date, see section 1100H of Pub. L. (B) to revoke any provisional settlement
111203, set out as a note under section 552a of Title 5, made by the depository institution with re-
Government Organization and Employees. spect to a check accepted by such institu-
EFFECTIVE DATE tion for deposit;
(C) to charge back the depositors account
Section effective Sept. 1, 1988, see section 613(b) of for the amount of such check; or
Pub. L. 10086, set out as a note under section 4001 of
this title.
(D) to claim a refund of such provisional
credit.
4005. Payment of interest (d) Prohibition on freezing certain funds in an
(a) In general account
Except as provided in subsection (b) or (c) of In any case in which a check is deposited in an
this section and notwithstanding any other pro- account at a depository institution and the
vision of law, interest shall accrue on funds de- funds represented by such check are not yet
posited in an interest-bearing account at a de- available for withdrawal pursuant to this chap-
pository institution beginning not later than ter, the depository institution may not freeze
the business day on which the depository insti- any other funds in such account (which are
tution receives provisional credit for such funds. otherwise available for withdrawal pursuant to
this chapter) solely because the funds so depos-
(b) Special rule for credit unions ited are not yet available for withdrawal.
Subsection (a) of this section shall not apply (e) Employee training on and compliance with
to an account at a depository institution de- requirements of this chapter
scribed in section 461(b)(1)(A)(iv) of this title if
the depository institution Each depository institution shall
(1) begins the accrual of interest or divi- (1) take such actions as may be necessary
dends at a later date than the date described fully to inform each employee (who performs
in subsection (a) of this section with respect duties subject to the requirements of this
to all funds, including cash, deposited in such chapter) of the requirements of this chapter;
account; and and
(2) provides notice of the interest payment (2) establish and maintain procedures rea-
policy in the manner required under section sonably designed to assure and monitor em-
4004(e) of this title. ployee compliance with such requirements.
(c) Exception for checks returned unpaid (Pub. L. 10086, title VI, 607, Aug. 10, 1987, 101
No provision of this chapter shall be construed Stat. 646; Pub. L. 111203, title X, 1086(f), July
as requiring the payment of interest or divi- 21, 2010, 124 Stat. 2086.)
dends on funds deposited by a check which is re- ADDITION OF SUBSECTION (f)
turned unpaid. Pub. L. 111203, title X, 1086(f), 1100H, July
(Pub. L. 10086, title VI, 606, Aug. 10, 1987, 101 21, 2010, 124 Stat. 2086, 2113, provided that, ef-
Stat. 646.) fective on the designated transfer date, this sec-
Page 1595 TITLE 12BANKS AND BANKING 4008

tion is amended by adding at the end the fol- (b) Regulations relating to improvement of check
lowing: processing system
(f) Adjustments to dollar amounts for inflation In order to improve the check processing sys-
tem, the Board shall consider (among other pro-
The dollar amounts under this chapter shall be posals) requiring, by regulation, that
adjusted every 5 years after December 31, 2011, by (1) depository institutions be charged based
the annual percentage increase in the Consumer upon notification that a check or similar in-
Price Index for Urban Wage Earners and Clerical strument will be presented for payment;
Workers, as published by the Bureau of Labor Sta- (2) the Federal Reserve banks and depository
tistics, rounded to the nearest multiple of $25. institutions provide for check truncation;
See Effective Date of 2010 Amendment note (3) depository institutions be provided incen-
below. tives to return items promptly to the deposi-
tory institution of first deposit;
REFERENCES IN TEXT (4) the Federal Reserve banks and depository
This chapter, referred to in text, was in the original
institutions take such actions as are necessary
this title, meaning title VI of Pub. L. 10086, Aug. 10, to automate the process of returning unpaid
1987, 101 Stat. 635, which is classified principally to this checks;
chapter. For complete classification of this Act to the (5) each depository institution and Federal
Code, see Short Title note set out under section 4001 of Reserve bank
this title and Tables. (A) place its endorsement, and other nota-
tions specified in regulations of the Board,
EFFECTIVE DATE OF 2010 AMENDMENT on checks in the positions specified in such
Amendment by Pub. L. 111203 effective on the des- regulations; and
ignated transfer date, see section 1100H of Pub. L. (B) take such actions as are necessary to
111203, set out as a note under section 552a of Title 5, (i) automate the process of reading en-
Government Organization and Employees. dorsements; and
(ii) eliminate unnecessary endorsements;
4007. Effect on State law (6) within one business day after an originat-
(a) In general ing depository institution is presented a check
(for more than such minimum amount as the
Any law or regulation of any State in effect on Board may prescribe)
September 1, 1989, which requires that funds de- (A) such originating depository institution
posited or received for deposit in an account at determines whether it will pay such check;
a depository institution chartered by such State and
be made available for withdrawal in a shorter (B) if such originating depository institu-
period of time than the period of time provided tion determines that it will not pay such
in this chapter or in regulations prescribed by check, such originating depository institu-
the Board under this chapter (as in effect on tion directly notify the receiving depository
September 1, 1989) shall institution of such determination;
(1) supersede the provisions of this chapter
and any regulations by the Board to the ex- (7) regardless of where a check is cleared ini-
tent such provisions relate to the time by tially, all returned checks be eligible to be re-
which funds deposited or received for deposit turned through the Federal Reserve System;
(8) Federal Reserve banks and depository in-
in an account shall be available for with-
stitutions participate in the development and
drawal; and
implementation of an electronic clearinghouse
(2) apply to all federally insured depository
process to the extent the Board determines,
institutions located within such State.
pursuant to the study under subsection (f) of
(b) Override of certain State laws this section, that such a process is feasible;
Except as provided in subsection (a) of this and
section, this chapter and regulations prescribed (9) originating depository institutions be
under this chapter shall supersede any provision permitted to return unpaid checks directly to,
of the law of any State, including the Uniform and obtain reimbursement for such checks di-
Commercial Code as in effect in such State, rectly from, the receiving depository institu-
which is inconsistent with this chapter or such tion.
regulations. (c) Regulatory responsibility of Board for pay-
ment system
(Pub. L. 10086, title VI, 608, Aug. 10, 1987, 101
(1) Responsibility for payment system
Stat. 647.)
In order to carry out the provisions of this
4008. Regulations and reports by Board chapter, the Board of Governors of the Federal
Reserve System shall have the responsibility
(a) In general to regulate
After notice and opportunity to submit com- (A) any aspect of the payment system, in-
ment in accordance with section 553(c) of title 5, cluding the receipt, payment, collection, or
the Board shall prescribe regulations clearing of checks; and
(1) to carry out the provisions of this chap- (B) any related function of the payment
ter; system with respect to checks.
(2) to prevent the circumvention or evasion (2) Regulations
of such provisions; and The Board shall prescribe such regulations
(3) to facilitate compliance with such provi- as it may determine to be appropriate to carry
sions. out its responsibility under paragraph (1).
 4008 TITLE 12BANKS AND BANKING Page 1596

(d) Reports (Pub. L. 10086, title VI, 609, Aug. 10, 1987, 101
(1) Implementation progress reports Stat. 647; Pub. L. 111203, title X, 1086(d), July
(A) Required reports 21, 2010, 124 Stat. 2086.)
The Board shall transmit a report to both AMENDMENT OF SECTION
Houses of the Congress not later than 18, 30, Pub. L. 111203, title X, 1086(d), 1100H, July
and 48 months after August 10, 1987. 21, 2010, 124 Stat. 2086, 2113, provided that, ef-
(B) Contents of report fective on the designated transfer date, this sec-
Each such report shall describe tion is amended:
(i) the actions taken and progress made (1) in subsection (a), by inserting , jointly
by the Board to implement the schedules with the Director of the Bureau of Consumer
established in section 4002 of this title, and Financial Protection, after Board; and
(ii) the impact of this chapter on con- (2) by striking out subsection (e) and adding
sumers and depository institutions. the following:
(2) Evaluation of temporary schedule report (e) Consultations
(A) Report required In prescribing regulations under subsections (a)
and (b), the Board and the Director of the Bureau
The Board shall transmit a report to both
of Consumer Financial Protection, in the case of
Houses of the Congress not later than 2
subsection (a), and the Board, in the case of sub-
years after August 10, 1987, regarding the ef-
section (b), shall consult with the Comptroller of the
fects the temporary schedule established
Currency, the Board of Directors of the Federal De-
under section 4002(c) of this title have had on
posit Insurance Corporation, and the National
depository institutions and the public.
Credit Union Administration Board.
(B) Contents of report
See Effective Date of 2010 Amendment note
Such report shall also assess the potential below.
impact the implementation of the schedule
established in section 4002(b) of this title CODIFICATION
will have on depository institutions and the In subsec. (d)(3), September 1, 1988 substituted for
public, including an estimate of the risks to section 603(b) takes effect on authority of section
and losses of depository institutions and the 613(b) of Pub. L. 10086, set out as an Effective Date
benefits to consumers. Such report shall also note under section 4001 of this title.
contain such recommendations for legisla- EFFECTIVE DATE OF 2010 AMENDMENT
tive or administrative action as the Board Amendment by Pub. L. 111203 effective on the des-
may determine to be necessary. ignated transfer date, see section 1100H of Pub. L.
(3) Comptroller General evaluation report 111203, set out as a note under section 552a of Title 5,
Government Organization and Employees.
Not later than 6 months after September 1,
1988, the Comptroller General of the United TRANSFER OF FUNCTIONS
States shall transmit a report to the Congress Federal Home Loan Bank Board abolished and func-
evaluating the implementation and adminis- tions transferred, see sections 401 to 406 of Pub. L.
tration of this chapter. 10173, set out as a note under section 1437 of this title.
(e) Consultation EXCEPTIONS IN AREAS WHERE MAJOR DISASTER EXISTS
In prescribing regulations under subsections Pub. L. 10518, title V, 50002, June 12, 1997, 111 Stat.
(a) and (b) of this section, the Board shall con- 211, provided that:
sult with the Comptroller of the Currency, the (a) TRUTH IN LENDING ACT.During the 240-day pe-
Board of Directors of the Federal Deposit Insur- riod beginning on the date of enactment of this Act
[June 12, 1997], the Board of Governors of the Federal
ance Corporation, the Federal Home Loan Bank
Reserve System may make exceptions to the Truth in
Board, and the National Credit Union Adminis- Lending Act [15 U.S.C. 1601 et seq.] for transactions
tration Board. within an area in which the President, pursuant to sec-
(f) Electronic clearinghouse study tion 401 of the Robert T. Stafford Disaster Relief and
(1) Study required Emergency Assistance Act [42 U.S.C. 5170], has deter-
mined, on or after February 28, 1997, that a major disas-
The Board shall study the feasibility of mod- ter exists, or within an area determined to be eligible
ernizing and accelerating the check payment for disaster relief under other Federal law by reason of
system through the development of an elec- damage related to the 1997 flooding of the Red River of
tronic clearinghouse process utilizing existing the North, the Minnesota River, and the tributaries of
telecommunications technology to avoid the such rivers, if the Board determines that the exception
can reasonably be expected to alleviate hardships to
necessity of actual presentment of the paper
the public resulting from such disaster that outweigh
instrument to a payor institution before such possible adverse effects.
institution is charged for the item. (b) EXPEDITED FUNDS AVAILABILITY ACT.During the
(2) Consultation; factors to be studied 240-day period beginning on the date of enactment of
this Act [June 12, 1997], the Board of Governors of the
In connection with the study required under Federal Reserve System may make exceptions to the
paragraph (1), the Board shall Expedited Funds Availability Act [12 U.S.C. 4001 et
(A) consult with appropriate experts in seq.] for depository institution offices located within
telecommunications technology; and any area referred to in subsection (a) of this section if
(B) consider all practical and legal impedi- the Board determines that the exception can reason-
ments to the development of an electronic ably be expected to alleviate hardships to the public re-
clearinghouse process. sulting from such disaster that outweigh possible ad-
(3) Report required verse effects.
(c) TIME LIMIT ON EXCEPTIONS.Any exception made
The Board shall report its conclusions to the under this section shall expire not later than Septem-
Congress within 9 months of August 10, 1987. ber 1, 1998.
Page 1597 TITLE 12BANKS AND BANKING 4009

(d) PUBLICATION REQUIRED.The Board of Governors of this section, each of the agencies referred to
of the Federal Reserve System shall publish in the Fed- in such subsection may exercise, for purposes
eral Register a statement that of enforcing compliance with any requirement
(1) describes any exception made under this sec-
imposed under this chapter, any other author-
tion; and
(2) explains how the exception can reasonably be ity conferred on it by law.
expected to produce benefits to the public that out- (c) Enforcement by Board
weigh possible adverse effects. (1) In general
Similar provisions were contained in the following
prior acts: Except to the extent that enforcement of the
Pub. L. 10376, 2, Aug. 12, 1993, 107 Stat. 752. requirements imposed under this chapter is
Pub. L. 102485, 3, Oct. 23, 1992, 106 Stat. 2772. specifically committed to some other Govern-
ment agency under subsection (a) of this sec-
4009. Administrative enforcement tion, the Board of Governors of the Federal
(a) Administrative enforcement Reserve System shall enforce such require-
ments.
Compliance with the requirements imposed
(2) Additional remedy
under this chapter, including regulations pre-
scribed by and orders issued by the Board of If the Board determines that
Governors of the Federal Reserve System under (A) any depository institution which is not
this chapter, shall be enforced under a depository institution described in sub-
(1) section 8 of the Federal Deposit Insur- section (a) of this section, or
ance Act [12 U.S.C. 1818] in the case of (B) any other person subject to the author-
(A) national banks, and Federal branches ity of the Board under this chapter, includ-
and Federal agencies of foreign banks, by ing any person subject to the authority of
the Office of the Comptroller of the Cur- the Board under section 4004(d)(2) or 4008(c)
rency; of this title,
(B) member banks of the Federal Reserve has failed to comply with any requirement im-
System (other than national banks), and of- posed by this chapter or by the Board under
fices, branches, and agencies of foreign this chapter, the Board may issue an order
banks located in the United States (other prohibiting any depository institution, any
than Federal branches, Federal agencies, Federal Reserve bank, or any other person
and insured State branches of foreign subject to the authority of the Board from en-
banks), by the Board of Governors of the gaging in any activity or transaction which
Federal Reserve System; and directly or indirectly involves such non-
(C) banks insured by the Federal Deposit complying depository institution or person
Insurance Corporation (other than members (including any activity or transaction involv-
of the Federal Reserve System) and insured ing the receipt, payment, collection, and
State branches of foreign banks, by the clearing of checks and any related function of
Board of Directors of the Federal Deposit In- the payment system with respect to checks).
surance Corporation; (d) Procedural rules
(2) section 8 of the Federal Deposit Insur- The authority of the Board to prescribe regu-
ance Act [12 U.S.C. 1818], by the Director of lations under this chapter does not impair the
the Office of Thrift Supervision in the case of authority of any other agency designated in this
savings associations the deposits of which are section to make rules regarding its own proce-
insured by the Federal Deposit Insurance Cor- dures in enforcing compliance with require-
poration; and ments imposed under this chapter.
(3) the Federal Credit Union Act [12 U.S.C.
1751 et seq.], by the National Credit Union Ad- (Pub. L. 10086, title VI, 610, Aug. 10, 1987, 101
ministration Board with respect to any Fed- Stat. 649; Pub. L. 10173, title VII, 744(d), Aug.
eral credit union or insured credit union. 9, 1989, 103 Stat. 438; Pub. L. 102242, title II,
212(h), Dec. 19, 1991, 105 Stat. 2303.)
The terms used in paragraph (1) that are not de-
REFERENCES IN TEXT
fined in this chapter or otherwise defined in sec-
tion 3(s) of the Federal Deposit Insurance Act The Federal Credit Union Act, referred to in subsec.
(12 U.S.C. 1813(s)) shall have the meaning given (a)(3), is act June 26, 1934, ch. 750, 48 Stat. 1216, as
amended, which is classified generally to chapter 14
to them in section 1(b) of the International
( 1751 et seq.) of this title. For complete classification
Banking Act of 1978 (12 U.S.C. 3101). of this Act to the Code, see section 1751 of this title and
(b) Additional powers Tables.
(1) Violation of this chapter treated as viola- AMENDMENTS
tion of other Acts 1991Subsec. (a). Pub. L. 102242, 212(h)(2), inserted
For purposes of the exercise by any agency at end The terms used in paragraph (1) that are not
referred to in subsection (a) of this section of defined in this chapter or otherwise defined in section
its powers under any Act referred to in that 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) shall have the meaning given to them in section
subsection, a violation of any requirement im-
1(b) of the International Banking Act of 1978 (12 U.S.C.
posed under this chapter shall be deemed to be 3101).
a violation of a requirement imposed under Subsec. (a)(1). Pub. L. 102242, 212(h)(1), added par. (1)
that Act. and struck out former par. (1) which read as follows:
(2) Enforcement authority under other Acts section 8 of the Federal Deposit Insurance Act in the
case of
In addition to its powers under any provision (A) national banks, by the Comptroller of the Cur-
of law specifically referred to in subsection (a) rency;
 4010 TITLE 12BANKS AND BANKING Page 1598

(B) member banks of the Federal Reserve System for a violation of this chapter if the depository
(other than national banks), by the Board of Gov- institution demonstrates by a preponderance
ernors of the Federal Reserve System; and of the evidence that the violation was not in-
(C) banks insured by the Federal Deposit Insur-
ance Corporation (other than members of the Federal
tentional and resulted from a bona fide error,
Reserve System), by the Board of Directors of the notwithstanding the maintenance of proce-
Federal Deposit Insurance Corporation;. dures reasonably adapted to avoid any such
1989Subsec. (a)(2). Pub. L. 10173 amended par. (2) error.
generally. Prior to amendment, par. (2) read as follows: (2) Examples
section 5(d) of the Home Owners Loan Act of 1933, sec-
tion 407 of the National Housing Act, and section 17 of Examples of a bona fide error include cleri-
the Federal Home Loan Bank Act, by the Federal Home cal, calculation, computer malfunction and
Loan Bank Board (acting directly or through the Fed- programming, and printing errors, except that
eral Savings and Loan Insurance Corporation), in the an error of legal judgment with respect to a
case of any institution subject to any of those provi- depository institutions obligation under this
sions; and. chapter is not a bona fide error.
EFFECTIVE DATE (d) Jurisdiction
Section effective Sept. 1, 1988, see section 613(b) of Any action under this section may be brought
Pub. L. 10086, set out as a note under section 4001 of in any United States district court, or in any
this title.
other court of competent jurisdiction, within
4010. Civil liability one year after the date of the occurrence of the
violation involved.
(a) Civil liability
(e) Reliance on Board rulings
Except as otherwise provided in this section,
any depository institution which fails to comply No provision of this section imposing any li-
with any requirement imposed under this chap- ability shall apply to any act done or omitted in
ter or any regulation prescribed under this chap- good faith in conformity with any rule, regula-
ter with respect to any person other than an- tion, or interpretation thereof by the Board of
other depository institution is liable to such Governors of the Federal Reserve System, not-
person in an amount equal to the sum of withstanding the fact that after such act or
(1) any actual damage sustained by such per- omission has occurred, such rule, regulation, or
son as a result of the failure; interpretation is amended, rescinded, or deter-
(2)(A) in the case of an individual action, mined by judicial or other authority to be in-
such additional amount as the court may valid for any reason.
allow, except that the liability under this sub- (f) Authority to establish rules regarding losses
paragraph shall not be less than $100 nor and liability among depository institutions
greater than $1,000; or The Board is authorized to impose on or allo-
(B) in the case of a class action, such cate among depository institutions the risks of
amount as the court may allow, except that loss and liability in connection with any aspect
(i) as to each member of the class, no mini- of the payment system, including the receipt,
mum recovery shall be applicable; and payment, collection, or clearing of checks, and
(ii) the total recovery under this subpara- any related function of the payment system
graph in any class action or series of class with respect to checks. Liability under this sub-
actions arising out of the same failure to section shall not exceed the amount of the
comply by the same depository institution check giving rise to the loss or liability, and,
shall not be more than the lesser of $500,000 where there is bad faith, other damages, if any,
or 1 percent of the net worth of the deposi- suffered as a proximate consequence of any act
tory institution involved; and or omission giving rise to the loss or liability.
(3) in the case of any successful action to en- (Pub. L. 10086, title VI, 611, Aug. 10, 1987, 101
force the foregoing liability, the costs of the Stat. 650.)
action, together with a reasonable attorneys
fee as determined by the court. EFFECTIVE DATE
(b) Class action awards Section effective Sept. 1, 1988, see section 613(b) of
Pub. L. 10086, set out as a note under section 4001 of
In determining the amount of any award in this title.
any class action, the court shall consider,
among other relevant factors CHAPTER 42LOW-INCOME HOUSING PRES-
(1) the amount of any actual damages award- ERVATION AND RESIDENT HOMEOWNER-
ed; SHIP
(2) the frequency and persistence of failures
SUBCHAPTER IPREPAYMENT OF MORTGAGES
of compliance; INSURED UNDER NATIONAL HOUSING ACT
(3) the resources of the depository institu-
tion; Sec.
(4) the number of persons adversely affected; 4101. General prepayment limitation.
4102. Notice of intent.
and 4103. Appraisal and preservation value of eligible
(5) the extent to which the failure of compli- low-income housing.
ance was intentional. 4104. Annual authorized return and preservation
(c) Bona fide errors rents.
(1) General rule 4105. Federal cost limits and limitations on plans
of action.
A depository institution may not be held lia- 4106. Information from Secretary.
ble in any action brought under this section 4107. Plan of action.