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Re: [OM] Beware of foreign entanglements?

Subject: Re: [OM] Beware of foreign entanglements?
From: James M Costello <jamie-nancy@xxxxxxxx>
Date: Tue, 20 Nov 2001 21:50:49 -0500
On Tue, 20 Nov 2001 19:27:07 -0700 Garth Wood <garth@xxxxxxxxxxxxxxx>
writes:
> At 02:47 PM 20/11/2001 -0500, Tom Scales wrote:
> 
> [snip]
> 
> >"Certified cheque" in Canada is the same thing [as a "cashiers' 
> check" in the U.S.].
> >There's terminology differences too.
> 
> Actually, Tom, my local branch of TD/Canada Trust informs me that 
> certified cheques, cashier's cheques and bank drafts are all going 
> the way of the dodo -- now they're all being replaced with money 
> orders, since someone finally figured out that they all perform the 
> same financial function anyways.  ;-)
> 
> Garth
> 

Unfortunately, in the U.S., they don't necessarily perform the same
function.   Money Orders always had a practical negotiable limit, usually
$600-$1000.   Certified checks were your personal check marked "certified
funds" by the issuing bank.   Cashiers' checks were just that: cash or
"good funds" reduced to check or draft form where the funds were
physically taken out of the depositor's account and placed in the Bank's
"on us" account.   The net result is that cashiers checks could not be
reached by creditors, IRS or trustees-in-bankruptcy; certified checks
could.   Unfortunately for the Banks, creating bookkeeping for the "on
us" account was monumental and no interest was allowed to be credited to
the institution during the time a cashiers check is waiting to clear.  
Another type of check allowed under the UCC was the teller's check.  
This was essentially a check drafted at the bank's counter on your
account.   The bank kept lending the money out and earning interest until
the check cleared your account.   The modern hybrid which  people accept
as a cashiers check, but really isn't (according to the Federal Reserve)
is the "Official Check".   If you notice, the funds are not paid out of
your bank.   They are paid out of an account owned by Integrated Payment
Systems and payable through some bank in Colorado.   The benefit to the
issuing bank is lower costs and they figure that we, the consumers, don't
know the difference.   They're right.   [Sorry for the long post :-{]

Jamie Costello

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