Reg for Change on Who can have Now Account

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Question:

The change on who can have a NOW account (Businesses). When was the change and in what Reg is the change found?

Answer:

The laws that changed as of July 21, 2011, were portions of the Federal Reserve Act, Federal Deposit Insurance Act, and Home Owner's Loan Act that prohibited the payment of interest on demand deposits. Those laws had prevented banks and savings associations from paying interest on business checking accounts since the bank failures of the 1930s.

There were no changes to the laws permitting NOW accounts. I repeat, the laws permitting NOW accounts and establishing qualifications for holders of NOW accounts were not changed. Businesses (other than some non-profits) can still not have NOW accounts, but they can have demand deposit accounts that earn interest. Some would say that's a "distinction without a difference." I would say there continue to be two separate products and there's sufficient reason to keep them separate.

First published on BankersOnline.com 9/10/12