NFIB

CONTACT: Michelle Dimarob, (202) 554-9000

Eighty-six percent of NFIB members support allowing business owners to earn interest

WASHINGTON, D.C., June 21, 2005 — Today, National Federation of Independent Business member Ed Pinto called on the U.S. Senate to support legislation allowing small-business owners to earn interest on their business checking accounts. Pinto offered first-hand insight about the frustrations facing small-business owners during a hearing before the Senate Committee on Banking, Housing and Urban Affairs where he voiced his support for the Business Checking Freedom Act of 2005 (H.R. 1224).

Pinto is a resident of Sarasota, Fla., and owner of Courtesy Settlement Services, which provides consulting services to the financial services industry.

“When the company was started, I can recall my astonishment at being told that a business could not earn interest on a checking account. After discussing it I decided that, despite the fact that a ‘sweep’ account didn’t include the benefit of FDIC insurance, I’d sign up for it so that I could have an account that at least paid some interest,” Pinto said. “What I didn’t know was that a ‘sweep’ account is really designed for a larger company, one with an in-house accounting and financial staff to keep up with the flow of money from account-to-account. We soon found that the ‘sweep’ account, while addressing the non-interest bearing account issue, resulted in a flood of paperwork from the bank. To add insult to injury, I never knew ‘sweep’ account fees were so high.”

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. The U.S. House of Representatives passed the legislation in May by a vote of 424-1. Similar legislation was also passed during the 106th and 107th Congresses. Eighty-six percent of NFIB members support allowing business owners to earn interest on their business checking account balances.

Completing his testimony Pinto added, “Forcing small-business owners to rely solely on a ‘sweep’ account can be a paperwork nightmare. I know the big banks have consistently opposed repealing the ban on interest checking, but in their efforts to insulate themselves from free-market competition, they are hurting small businesses. This bill is necessary consumer protection legislation, and every day it is delayed is an injustice to the acknowledged job creators in this country.”