05/25/2005
CONTACT: Michelle Dimarob, (202) 554-9000
WASHINGTON, D.C., May 24, 2005 — The National Federation of Independent Business, the nation’s largest small-business advocacy group, today announced it will “key vote” an upcoming vote on business-checking legislation. The U.S. House vote on the Business Checking Freedom Act of 2005 (H.R. 1224), which would give banks the authority to offer interest-bearing checking accounts to small-business owners, is expected on Tuesday evening.
Eighty-six percent of NFIB members support allowing business owners to earn interest on their business-checking account balances.
Earlier this year, U.S. Representative Sue Kelly (19th Dist.-N.Y.) re-introduced H.R. 1224 in an effort to repeal the ban on banks offering interest on business checking accounts. The Business Checking Freedom Act of 2005 does not require banks to provide interest. The bill simply gives banks the option to offer interest checking accounts to small businesses.
“While NFIB members overwhelmingly support doing away with this antiquated business practice, there are many others who support sending this prohibition to the graveyard of bad ideas,” said NFIB Executive Vice President of Public Policy and Political Dan Danner. “Rep. Sue Kelly has been a stalwart supporter of this pro-small-business legislation, and her leadership has been critical to raising awareness about the need to free small business from this outdated practice so they can select the banking products that best suit their business needs. Her dedication to Main Street’s job creators is both recognized and appreciated.”
The prohibition on paying interest on business checking accounts was enacted during the Great Depression as part of the Banking Act of 1933. As a result, today’s small-business owners are forced to choose between non-interest-bearing accounts and more costly “sweep” accounts, which require a much higher balance than ordinary checking accounts. Most small businesses do not have the resources necessary to maintain a “sweep” account, so they are forced to keep their money in non-interest-bearing accounts.
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision have all concluded that the statutory prohibition against paying interest on business accounts no longer serves a public purpose.
As an NFIB Key Vote, the final tally on the Business Checking Freedom Act will be sent to all 600,000 NFIB members as part of the group’s How Congress Voted scorebook. A 2004 nationwide survey sponsored by NFIB found that 66 percent of voters stated that they would be definitely or more likely to vote for the candidate supported by small business and NFIB.
The National Federation of Independent Business (NFIB) is the nation’s largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals.
