A Reserve Bank makes the following warranties when it handles ___________:
" For all items, the Reserve Bank warrants that the returned checks bear all endorsements by all parties that previously handled the checks
" For all electronic items, the Reserve Bank warrants all of the
" Regulation CC warranties as though they were paper checks
" For electronic items that are not representations of substitute checks, the Reserve Bank warrants the following to the bank to which it sends the item:
(a) The electronic portion of the item accurately represents all of the information on the front and back of the check as of the time the check was truncated
(b) All MICR line information is contained on the item
(c) The item conforms to the technical standards set forth in the operating circular
(d) No person will receive a transfer, presentment, or return, or otherwise be charged for the item such that the person will be asked to make payment based on an item he or she has already paid
Click on the arrows to vote for the correct answer
A. B. C. D.A
The warranties described in the question are those provided by a Reserve Bank when it handles certain types of items. The acronym "CRCM" is not defined in the question, but based on the description of the warranties provided, it can be inferred that the items in question are checks and other forms of payment that are processed electronically.
The first warranty provided by the Reserve Bank is that for all items (presumably including both paper and electronic checks), the returned checks bear all endorsements by all parties that previously handled the checks. This means that the Reserve Bank guarantees that all necessary endorsements have been included on the check, indicating that it has been properly authorized by all parties who have handled it.
The second warranty provided by the Reserve Bank is for all electronic items, and it warrants all of the Regulation CC warranties as though they were paper checks. Regulation CC is a federal regulation that governs the availability of funds and the collection of checks in the United States. The Reserve Bank's warranty means that it will guarantee that all electronic checks it handles meet the same standards as paper checks with respect to availability of funds and collection processes.
The third warranty provided by the Reserve Bank is specifically for electronic items that are not representations of substitute checks. A substitute check is a paper copy of an electronic check that is created when the original check is truncated (i.e., converted to an electronic format). The Reserve Bank's warranty for non-substitute electronic items includes several specific guarantees:
(a) The electronic portion of the item accurately represents all of the information on the front and back of the check as of the time the check was truncated. This means that the electronic check contains all of the same information as the original paper check, including any endorsements or other markings.
(b) All MICR line information is contained on the item. MICR stands for Magnetic Ink Character Recognition, and it is a technology used to encode information on the bottom of checks in a way that can be read by computers.
(c) The item conforms to the technical standards set forth in the operating circular. Operating Circulars are documents published by the Federal Reserve that provide guidance on various banking topics.
(d) No person will receive a transfer, presentment, or return, or otherwise be charged for the item such that the person will be asked to make payment based on an item he or she has already paid. This means that the Reserve Bank guarantees that no one will be charged for the same item multiple times or asked to pay for an item that has already been paid.
In summary, the warranties provided by the Reserve Bank when it handles checks and other forms of electronic payment include guarantees that all necessary endorsements are present, that electronic items meet the same standards as paper checks with respect to availability of funds and collection processes, and that specific requirements are met for electronic items that are not substitute checks.