creative financing

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Fri Apr 20 07:00:51 PDT 2001



> Since Bank B will allow me full use of the money right
> away, while Bank A will take a few days to process the debit, I
> have effectively conned Bank A into lending me $1000 for the
> time it takes to process a cheque ...

99+% of checks in the US clear overnight these days; the "clearing cycle" that people talk about relates to the fact that after the fact, banks have an amount of time (9-11 days) in which to "look back" and un-do a transaction. This mostly has to do with the fact that there still is no good non-repudiation protocol for written checks. Most banks cover this possibility by a) staggering availability (you can have the first $N on the next day, the next $NN on the third day, etc.) and b) attaching credit lines to checking accounts for overdraft protection; if they find that a check was used as a loan, no problem: there's interest on the loan.

Kiting actually refers to any activity that involves knowingly writing a bad check.

/jordan



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