In the News

Hill offers measure for speedy access to check deposit funds

Arkansas Democrat Gazette
03/24/2020

WASHINGTON -- U.S. Rep French Hill has introduced legislation that would make it easier for Americans to quickly access their funds when they deposit a check at any bank or federally-insured credit union.

HR 6306 is meant to help people affected by coronavirus-related economic restrictions. It comes as lawmakers debate an economic stimulus package that includes checks for most Americans.

The Little Rock Republican was a banker before running for Congress, serving as chief executive officer of Delta Bank and Trust before its purchase by Simmons First National Corp. in 2014.

The Immediate Funds Availability Act of 2020 would enable customers to deposit and spend up to $1,500 immediately, rather than waiting several days for the funds to clear.

The bill has been referred to the House Financial Services Committee of which Hill is a member.

If approved, people could write checks on the funds or spend it with debit cards without incurring overdraft fees.

The measure would especially benefit Americans who live from paycheck to paycheck, supporters say.

The provision only applies in states that have declared a public health emergency and it only applies to customers who have had accounts for at least six months. It would sunset in three years.

"Over the past few months I've had a number of customers in Little Rock talk to me about funds availability," Hill said.

"They get a paycheck and they go to deposit it at a bank, and they can get $200 but then they have to wait, basically [up to] a week, for that check to clear," he said.

Hill's legislation would change that.

"I look back at the funds availability policies and they're 30 years old," he said. "Inflation has grown, salaries have grown and expenses have grown but this policy has not changed over the decades."

The banking world has changed -- and things have sped up, Hill noted.

Back then, the typical check-clearing process "took several days and those were mostly paper checks that went through Federal Reserve district banks. Since the 1990s, that's almost all done electronically through electronic check presentment. And we're moving to real-time payments," he said.

Hill said the change would "reflect the modern funds crediting system that exists now."

It is belief of Congress, the bill states, that the Board of Governors of the Federal Reserve System should also "consider moving to a same-day check settlement system (including weekends and holidays)."

That provision was emphasized by Arkansas Bankers Association President and Chief Executive Officer Lorrie Trogden.

"While the United States maintains a world-class payments system, another important aspect of Congressman Hill's Immediate Funds Availability Act is that it emphasizes the need for the Board of Governors of the Federal Reserve System to consider moving to a same-day check settlement system which would allow consumers and businesses quicker access to funds deposited into their accounts," she said in an email. "Faster payments are not just about payments, it is also about every transaction handled by commercial banks, which is very important during these challenging times."

Arkansas banks are taking "aggressive steps to deliver important financial services. With over $100 billion in deposits and strong capital, banks are well equipped to meet customers' needs," she wrote.

Some Democrats are also pushing for changes to the system. The Payments Modernization Act of 2019, sponsored by U.S. Rep. Ayanna Pressley, D-Mass., would require "real-time" access to funds.

Ira Rheingold, executive director of the National Association of Consumer Advocates, said Hill's changes are an improvement over the status quo, but he'd like to see more sweeping changes to benefit families living paycheck to paycheck.

"We live in a very sophisticated banking world. There's no reason why a consumer's check, when it gets deposited, shouldn't be easily available for the consumer," Rheingold said.