WASHINGTON The House Financial Services Committee is expected to approve legislation today that would let banks pay interest on business checking accounts as early as 2003, temporarily expand sweep accounts, and let the federal government pay interest on bank reserves.
A bill supported by the panels financial institutions subcommittee last week would repeal a Depression-era prohibition on interest-bearing commercial checking accounts one year after enactment, but Committee Chairman Michael G. Oxley is expected to offer an amendment to extend the phase-in period to two years.
An industry coalition that backed a three-year transition (its members included representatives of Bank of America Corp., First Union Corp., the Independent Community Bankers of America, American Bankers Association, and the Financial Services Roundtable) was not able to round up enough votes, a member said. Rep. Melissa A. Hart, R-Pa., offered and then withdrew such an amendment in subcommittee.
Also today, House Financial Services is expected to merge the interest checking bill with a measure sponsored by Rep. Sue Kelly, R-N.Y., that would quadruple the number of times banks could sweep funds from non-interest-bearing commercial checking accounts into interest-bearing ones, to 24 a month. Her bill also would authorize the government to pay interest on required and excess reserves that banks and thrifts deposit with the Federal Reserve and would let the central bank adjust the level of required reserves.