§4008 Regulations and Reports by Board

Summary

The Federal Reserve Board, working with the Director of the Consumer Financial Protection Bureau, must write rules after taking public comments. The rules must make the chapter work, stop people from getting around it, and help banks follow it. To improve check processing, the Board should consider rules that: charge banks when a check is going to be presented; allow truncating checks so paper need not travel; give banks reasons to return items quickly and automate returns of unpaid checks; standardize where endorsements and markings go and make them readable by machines while cutting unnecessary marks; require an originating bank to decide within one business day (for checks over a Board-set minimum) whether it will pay and to tell the receiving bank if it will not; make all returned checks able to go back through the Federal Reserve; involve banks and Reserve banks in creating an electronic clearinghouse if it’s feasible; and allow originating banks to return unpaid checks and get reimbursement directly from the receiving bank. The Board is responsible for regulating any part of the payment system that touches checks and must write rules to do that. The Board must report to Congress at 18, 30, and 48 months after August 10, 1987 about progress on the schedule in section 4002 and the chapter’s effects on consumers and banks. It must also report within 2 years after August 10, 1987 on the temporary schedule’s effects and on the likely impact of the main schedule, including estimates of risks, losses, and benefits, and any recommendations. The Comptroller General must report to Congress within 6 months after September 1, 1988. The Board must consult the OCC, the FDIC Board, and the NCUA Board when making these rules. The Board must also study an electronic clearinghouse, talk to telecom experts, look at practical and legal obstacles, and report its conclusions within 9 months of August 10, 1987.