Question & Answer

Question: I'm concerned about your answer to the different hold policies. I'm a little concerned that banks could have hold policies that have service disparities for CRA purposes. I realize that Regulation CC permits this, but I think it has dangers.

Answer: You are absolutely right. The answer was correct in the context of Regulation CC. However, there are often ramifications to business practice beyond the regulation you are looking at. This is a good example of that. Clearly, hold policies are an important element in service. If a bank has different hold policies in different locations, that should be considered in the CRA service test. Longer holds in branches serving low- and moderate- income branches would be a powerful negative during your CRA examination.

In addition, there could be discrimination implications in the practice. The Equal Credit Opportunity Act and the Fair Housing Act don't speak to deposits. However, there is the 1866 Civil Rights Act which provides that all persons shall have the same rights as White citizens to make contracts. The hold policy would be part of the contract. Therefore, if there were a disparate impact on the basis of race, there could be a discrimination issue. So consider the impact of your policies on your market before you take the leap.

Copyright © 2000 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 17 & 18, 1/00