06/08/2005
At the end of May, the House of Representatives passed legislation that would remove the prohibition on business checking accounts earning interest.
In a 424-1 vote, lawmakers passed Rep. Sue Kelly’s (N.Y.-Dist. 19) Business Checking Freedom Act of 2005, H.R. 1224. This bill would repeal a Depression-era rule prohibiting banks to pay interest on business checking accounts. The Business Checking Freedom Act of 2005 does not require banks to provide interest, but instead gives then the option to do so.
NFIB members – 86 percent of them – support this option.
“NFIB members overwhelmingly support doing away with this antiquated business practice,” said Dan Danner, NFIB executive vice president of public policy and political. “It is time for the small businesses that are growing and shaping our economy to have the freedom to operate in a banking environment that rewards their strength, rather than stifles it. They need to be able to select the banking products that best suit their business needs.”
Without the changes this bill would implement, small business is left with very few options when it comes to checking. Due to the restrictions imposed by the Banking Act of 1933, they 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.
Lawmakers in the House have shown their support for this much-needed change, sending it onto the Senate, where there is still much work to be done. Similar legislation was passed in the House in March 2004, but the Senate failed to act.
Don’t let time run out on business checking this Congress – tell your senators to support this legislation.
