4000 - Advisory Opinions
Processing of Uncollected Check During Bank Closing
November 30, 1987
Walter P. Doyle, Counsel
Thank you for your November 11 letter regarding treatment of checks deposited immediately before a bank failure. Specifically, you posited the deposit of a check over $100,000 in an insured bank, drawn on another bank, and the closing of the insured bank before the check proceeds are available for withdrawal.
It is our policy to process an uncollected check in the possession of an insured bank at the time of its closing. Similarly, if a check has already been forwarded to another bank in the collection chain before the depository bank is closed, the collection process would continue. In either case, the proceeds for any such uncollected check would subsequently be received by FDIC as trustee for the depositor and remitted to him when payment becomes final. Such proceeds would not be considered part of the depositor's deposit balance with the failed bank and, thus, would not be subject to the $100,000 insurance limit.
Any check as to which final payment occurred before the bank was closed would become a part of the deposit balance subject to the $100,000 deposit insurance limit. "Final payment" normally occurs as soon as an item is paid in cash or posted to the drawer's account by the drawee bank, or when final settlement is made in the clearing process without retaining a right of revocation, or when a provisional settlement is not actually revoked within the time limit required by law, clearinghouse rules or other agreement (UCC § 4-213(1)).