What's So Interesting About Business Checking?

It is actually possible that there could be - sometime in the future - a change in the law that prohibits banks from paying interest on checking accounts held by businesses. Congress is giving attention to legislation that would grant this permission. The legislation has been supported by regulatory agencies. Acting Comptroller of the Currency Julie Williams testified in support of the legislation but did raise the Y2K warning about bank workload.

The subcommittee handling the draft legislation hopes to vote it out by the end of the summer. If that happens, we could see this in our lifetime. A more likely scenario is that the Congress recesses to go running for re-election before all this gets done.

There are costs associated with the bill, including proposed payment of interest on reserves, that could stymie any legislation, so don't get excited yet.

Industry lobbyists are split on whether to raise the permissible number of checks on a Money Market Deposit Account or permit businesses to hold interest-bearing checking accounts. There is also some concern that changes should be postponed until after Year 2000 to avoid conflicts in technical support requirements.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 11, 8/98