Bank Regulations To Be Reduced: Interest on Business Checking OK
The U.S. Congress House of Representatives has passed, by a 392 to 25 vote, legislation to reduce regulations on banks and credit unions. The legislation will make it easier for banks to open branches in other states while making it harder for retail companies to branch their bank-like industrial loan companies across state lines. Only companies that have more than 85% of their business in financial services can open up branches of their loan business in other states.
One of the add-on amendments to the bill, HR 1375, allows the payment of interest to business checking accounts, and also allows up to 24 transactions per month from those interest-bearing transaction accounts to other transaction accounts. It also expands the customer base of credit unions by allowing them to cash checks and wire money from non-members who are eligible to become members.
Representative Spencer Bachus, (R - Alabama) said "The financial services industry spends a great deal of time, a great deal of money dealing with outdated and ineffective regulations."
One amendment that was defeated was a proposal to not allow financial institutions to charge fees to account holders who deposit bad checks into their account. The reasoning, according to the sponsor of the suggestion, was because "...people have no idea when someone gives them a bad check, and they shouldn't be punished because of someone else's poor financial management." Rep. Bachus pointed out that making the banks "eat" the cost of bad checks would only pass on the cost of them to all the bank's customers, instead of just one. That amendment was defeated 255 - 167.
The bill now goes to the Senate, where, according to reports, it should have no problem passing.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 1, 3/05
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