1. Checks or drafts that have not been paid by the drawee bank. Also called uncollected items. Federal Reserve Float (Fed Float) is the time interval created when Federal Reserve Banks pay these checks before they are in turn paid by the payer bank. Federal Reserve Banks report these clearing checks as cash items in the process of collection in their weekly Statement of Condition.
Federal Reserve Regulation Cc requires banks to follow a uniform schedule of funds availability, even if funds have not been collected from the paying bank: a local check drawn on a bank in the same Federal Reserve check processing district is to be available for withdrawal funds two business days after a check is deposited; nonlocal checks are to be usable funds in five business days; and the first $100 of any check deposited, the next business day. See also Check Hold; Deferred Availability; Immediate Availability.
2. Check that cannot be paid by the drawee bank because the maker's account does not have enough funds to cover the check. Also called Not Sufficient Funds.
