WASHINGTON - Federal Reserve Board Chairman Alan Greenspan on Wednesday said he would support legislation to let banks pay interest on business checking accounts and earn interest on mandatory reserves held at the Federal Reserve banks.

Mr. Greenspan made the remark during a question-and-answer session after his testimony to the House Financial Services Committee about the economy. Rep. Sue Kelly, R-N.Y., asked whether Mr. Greenspan favored legislation that she has introduced to authorize the Fed to pay interest on reserves and that has been combined with legislation to let banks pay interest on business checking.

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