CUNA Regulatory Comment Call

May 13, 2008

Fed Proposes Changes to ACH Posting Times and Changes to its Payments System Risk Policy


Please feel free to email your comments to SVP and Deputy General Counsel Mary Dunn at or Assistant General Counsel Lilly Thomas at; or mail letters to Mary or Lilly c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004. Click here for a copy of the proposed changes to the ACH posting rules. A copy of the proposed changes to the Fed's PSR policy can be accessed here.


The Federal Reserve Banks' (Reserve Banks) Fed ACH service currently posts commercial and government automated clearinghouse (ACH) credit transfers at 8:30 a.m. ET and debit transfers at 11:00 a.m. ET.

For several years, the Board has been reviewing long-term developments in intraday liquidity and risk management in financial markets and the payments system, including increased use of daylight overdrafts at the Reserve Banks and increased Fedwire funds transfers late in the day. The Board evaluated the simultaneous posting of ACH credit and debit transfers at 8:30 a.m. ET, which is the same time as EPN, the other ACH operator posts these transfers, and believed this change would remove competitive disparities between these systems or their participants arising from different settlement times for ACH debit transfers. In its evaluation the Board recognized that these changes could prompt depository institutions to maintain higher account balances overnight or require staff to be at their jobs earlier to manage Reserve account balances.

The Board also identified concerns related to risk and efficiency that suggest that a change in the Fed's approach to daylight overdrafts is needed. In its review the Board noted:


Proposed Changes to ACH Posting Rules

The Board proposes to change the posting time for commercial and government ACH debit transfers that are processed by the FedACH service to 8:30 a.m. ET to coincide with the posting time for ACH credit transfers. The Board also intends to move the posting time for Treasury Tax and Loan investments associated with Electronic Federal Tax Payment System ACH debit transfers to 8:30 a.m. ET to maintain the simultaneous posting of ACH transactions and related Treasury transactions.

According to the proposal, posting ACH debit transfers at 8:30 is a 'more attractive' approach to the current 11 a.m. settlement time and would:

The Board contends that up to 170 institutions that are eligible to incur daylight overdrafts could incur higher daylight overdraft fees if funding patterns remained the same; about 35 institutions that are not eligible to incur daylight overdrafts would need to make arrangements to hold higher account balances overnight or to obtain funding earlier. The proposal indicates that banker's banks and corporate credit unions make up those 35 institutions.

Proposed Changes to the PSR Policy

The Board is also requesting comment on proposed changes to its Payments System Risk (PSR) policy in response to the Board's 2006 Consultation Paper on intraday liquidity, operational risk, and daylight overdrafts. The proposal presents a new strategy for providing intraday credit to depository institutions that would encourage institutions to collateralize their daylight overdrafts.

The Board believes that this new strategy would "explicitly recognize that the Federal Reserve has an important role in providing intraday balances to foster the smooth operation of the payments system, provide temporary, intraday balances to healthy depository institutions predominantly through collateralized intraday overdrafts, and reduce over time the reliance of the banking industry on uncollateralized daylight credit if this can be done without significantly disrupting the operation of the payments system or causing other unintended adverse consequences."

The Board proposes the following:

The proposal seeks comment on several questions and provides a simple fee calculator that will allow institutions to estimate daylight overdraft fees under the proposed policy.


  1. If you originate debit transfers through FedACH, to what extent would you incur competitive disparities because of the difference in settlement times between operators? To what extent would adopting the proposal alter this situation?
    Please explain.

  2. To what extent are there competitive disparities between ACH operators because of the difference in settlement times? To what extent would adopting the proposal alter this situation?

    a. Yes _____    b. No _____

    Please explain.

  3. Would the proposed change have an effect on the availability of funds to credit union members?

    a. Yes _____    b. No _____

    Please explain.

  4. What costs would you expect to incur to fund their Federal Reserve accounts by 8:30 a.m. for ACH debit transfers, particularly if the you did not want or were ineligible to incur daylight overdrafts?
    Please explain.

  5. If the Board changed the posting times for ACH debit transfers and EFTPS ACH debit transfers to 8:30 a.m., is six months a sufficient lead time for implementation to enable institutions to make plans to secure additional funding, as needed?

    a. Yes _____    b. No _____

    Please explain.

  6. Should the Board implement the change to the posting rules at the same time as the proposed broader PSR policy changes to provide institutions an opportunity to pledge (additional) collateral to manage a possible increase in fees?

    a. Yes ______    b. No _____

    Please explain.

  7. Do you regularly use Federal Reserve daylight credit? If so, do you currently have sufficient unencumbered eligible collateral to pledge to the Reserve Banks to take advantage of a zero fee for collateralized overdrafts?

  8. Do you believe that a zero fee for collateralized daylight overdrafts will contribute to an overall reduction in liquidity, operational, and credit risks in the payments system?

    a. Yes _____    b. No _____

    Please explain.

  9. What procedural or systems changes do you expect to make as a result of this proposed policy change?

    a. Yes _____   b. No _____

    Please explain.

  10. Please provide any additional comments.

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Lilly Thomas • Assistant General Counsel • (202) 508-6733 •
Luke Martone • Senior Regulatory Counsel • (202) 508-6743 •