……………..So this is how my day went today.
I get into work, and my manager arrives shortly afterwards. He calls me into his office and he’s none too happy.
I approved an international wire for over $50,000 yesterday. Loss Prevention emailed me and the wire initiator back to have the wire cancelled. Okay, fine. Done. Didn’t question it, don’t care, whatever.
Apparently, it was because the check wasn’t cleared.
You see, the funds came into the account from a check drawn on another bank. The check had been deposited two business days ago.
“How can you approve a wire from a check that was posted to the account two days ago?” my manager is asking me. “This check was from another bank, it wasn’t verified, and this account never had money until now!”
He then told me that I was very lucky that Loss Prevention caught it and had the wire cancelled. Had they not and the check that the wire was drawn from bounced, that would have been a loss of more than $50,000. It would have been over $10,000 more than I made a year! And the branch would have ate the loss.
And I would have been fired.
Bad Laws + Outdated Infrastructure = My Fault
I don’t remember approving this wire.
I mean, I did. My signature was on it. But I don’t remember it. When my boss brought it up, I had no defense because I honestly had no idea what he was talking about.
I was, and still am, wracking my brain trying to figure out how the hell that wire slipped past me. I mean, I’m usually pretty anal about these things. I tend to second guess wires that most approve without a second thought.
We all had a pretty big pile of work yesterday when I approved this wire. I think I received this wire with another one while on the phone with a customer and trying to get some paperwork done. But it’s not like that never happens. When am I not buried under way more work than I can handle?
I know myself pretty well. I’ve been doing this for years. I saw something that tipped the scales in favor of “Alright, this wire shouldn’t be a problem.”
The only thing I can think of is that there is one field that tells us when a check has been cleared. Not simply available, but cleared.
For those that don’t know, check “availability” is simply when the bank makes its own money available for use while the check is still clearing, while the check being “cleared” is when the bank actually receives the money from the paying account. Just because you see the money in your account doesn’t mean the check is cleared.
Of course, we don’t have a record of what this field said when I was approving the wire, so I got nothing.
That said, I have to point out that the risk was taken on by the bank’s availability policies, not by me. Bank employees shouldn’t assume the responsibility of a check bouncing.
Checks take time to clear. In my experience, it’s usually a minimum of three business days before a check clears. Before then, they can still bounce.
So why the hell are checks available in the next one or two days!?
The Expedited Funds Availability Act of 1987 is where your answer lies. Created to address the bizarre and long check holding times of the day, the law requires that certain amounts of a check be made available the next business day and certain amounts be made available the second business day. If you hate yourself, you can read the text of the law here.
I’ll be nice and give you the Wikipedia version: $200 must be made available the next business day and $4,800 must be made available the second business day.
Of course, banks like to compete with each other by offering next day availability.
This, to me, is mind-boggling.
I understand why the law was created. It was to standardize the amount of time a bank holds funds from deposited checks.
Hey Congress, here’s a way to do that: Allow the banks to hold all the funds until the checks are clear.
The Check 21 Act did shorten the clearing times from what they were a couple decades ago, but that still doesn’t change the fact that checks still take time to clear. A law to require banks to make what are essentially subprime loans is so financially irresponsible that you would think the members of Congress who voted for it were, well, members of Congress.
If anything, the Expedited Check Availability Act hurts people as much as it helps. It should honestly be repealed. Do you know how many people overdraw their accounts because they were drawing on unavailable funds? Because they put in a check, took out the money, the check bounced, and now they owe that money to the bank?
You know those fake sweepstakes check scams that some people still fall for? The Expedited Check Availability Act is the vehicle that allows these scams to take place. That and the existence of people who still have ever heard of these scams.
It’s nice to see that low paid branch employees such as myself have to pick up the slack when bad laws and outdated infrastructure fails.
Banks should be allowed to hold the entire check until it clears. Not for as long as they want to be able to make money off that money. I would support a law banning that practice. But not one that requires banks to assume that a paper IOU given to a teller who is on food stamps is going to be honored. You’re dealing with the general public! People say a lot of things.
But if banks want to compete and go the extra mile by making more funds available than the law requires and/or make them available quicker, then they should be the ones to fully assume the risk and not place that responsibility on the branch employees (or extra unwritten rules on the customers). If you’re going to offer your customers next day availability, then offer it. Don’t say that they aren’t allowed to do a wire on funds that read as available in their account two business days after the check was deposited.
I understand the rationale behind it. But banks, either take the risk of offering that extra funds availability or not. Or add to your online banking platforms a tab that shows whether a check is clear rather than how much of the funds are available. But don’t pick and choose whether funds are “good” or not by having your employees decide, making them take on the risk of bouncing or the battle with the customer. Don’t tell your customers the funds are good in one breath and bad in the other, even if it is technically true. They aren’t bankers and they won’t get it.
Time To Leave
If there was any doubt that it was time for me to leave retail banking, this was one of two events today that would have served as the final nail in the coffin. The other event is for another article.
When you’re feeling trapped and confused in a retail banking job and you’re trying to get out but can’t even land an interview, this is the last thing you need.
When you’re losing most of your paycheck to taxes and it’s politicians and their bank executive friends (who received all that bailout money) that put those account funds in a position where a $50,000+ loss is even a possibility makes it all even worse.
And yes, I know that I’m at fault here too. Somehow, I didn’t do proper verification.
But this just goes to show how unstable a job is. Not a job in finance, but any job. One oversight and you can find yourself without the income necessary to buy food or pay rent despite years of service and production.
That’s why it’s best to save and invest your money into a cheap online brokerage account like the ones offered by TradeKing. Or any online broker, really. You could invest in stocks, bonds, mutual or index funds, whatever really. But invest your money into something that spits out income. That’s what I do. So that hopefully I will earn enough from passive dividend income–income that I don’t have to “earn” or “qualify” for or deal with anything to receive–to pay for all my expenses.
And then I’ll never have to deal with crap like this again.
Readers–What do YOU think!? Should I be the only one completely at fault if the bank had taken a loss? Or do the banks and government shoulder at least some of the “moral” blame? Does anyone find it unsettling how easy it is to be fired from a job? Leave your thoughts in the comments below!
Disclaimer: That last link is an affiliate link. It leads to TradeKing, a discount brokerage. If you create and fund an account with them, I earn a commission at no cost to you. If you haven’t started investing yet, do so now. As you literally just read in this article, the small commission I make will pale in comparison to the benefits you reap, such as not having to deal with W2 work.