CRCM practice question 17 of 35

While Presenting items for payment:

Answer options

A: A Reserve Bank or a subsequent collecting bank may present an item for payment but doesn’t send the item for presentment and payment

B: A Reserve Bank may send an item to a collecting bank with authority to present it for payment or send it for presentment and payment Correct answer

C: A Reserve Bank may present an item for payment at the place requested by the paying bank, at a place requested by the nonbank payor, through a clearinghouse, or under a special collection agreement Correct answer

D: Within a Reserve Bank’s district, the Reserve Bank may present the item indirectly to the paying bank or a nonbank payor, as applicable

Correct Answer:

B. A Reserve Bank may send an item to a collecting bank with authority to present it for payment or send it for presentment and payment; C. A Reserve Bank may present an item for payment at the place requested by the paying bank, at a place requested by the nonbank payor, through a clearinghouse, or under a special collection agreement

Explanation

Under Regulation J (12 CFR Part 210), Reserve Banks have specific authorities for presenting items for payment. Option B is correct as it accurately describes that Reserve Banks may send items to collecting banks with authority to present for payment or send for presentment and payment. Option C is correct because Reserve Banks may present items through various methods including at locations requested by the paying bank, through clearinghouses, or under special collection agreements, providing flexibility in the presentment process.

Why Incorrect

A. Incorrect because it contradicts itself - stating banks may present items but don't send them for presentment is illogical and inconsistent with Regulation J procedures.
D. Incorrect because Reserve Banks typically present items directly, not indirectly, within their district under standard Regulation J procedures.

References

1. 12 CFR Part 210 - Regulation J (Collection of Checks and Other Items by Federal Reserve Banks), Sections 210.9-210.10

2. Federal Reserve Operating Circular 3 - Collection of Cash Items and Returned Checks, Section 5.0

3. "The Federal Reserve System: Purposes and Functions," Board of Governors of the Federal Reserve System, Chapter 5: Financial Services

4. Federal Reserve Banks Operating Circulars, available at frbservices.org

5. Code of Federal Regulations Title 12 - Banks and Banking, Chapter II, Part 210

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