[Congressional Record Volume 148, Number 42 (Tuesday, April 16, 2002)]
[Extensions of Remarks]
[Page E545]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BUSINESS INTEREST CHECKING FREEDOM ACT OF 2002

                                 ______
                                 

                               speech of

                        HON. CHARLES A. GONZALEZ

                                of texas

                    in the house of representatives

                         Tuesday, April 9, 2002

  Mr. GONZALEZ. Mr. Speaker, H.R. 1009 contains a provision, Section 7, 
entitled Rule of Construction, regarding certain real estate escrow 
accounts. This provision is substantially the same as Section 7 of H.R. 
974, the Small Business Interest Checking Act of 2001, which passed the 
House last year. The provision makes clear that the current treatment 
of certain services and benefits provided by banks in lieu of interest 
in connection with escrow accounts for real estate closing transactions 
remains the same. There are some minor technical changes to this 
section from H.R. 974. These changes make the provision more 
straightforward, and clarify the specific banking statutes to which 
this provision applies. This provision does not alter the current legal 
definition of interest or the legal treatment of real estate closing 
escrow transactions. It is my understanding that current Federal legal 
standards, including regulatory interpretations, regarding the 
definition of interest on deposits will continue to stand.
  Currently, the Federal Reserve's Regulation Q provides that services 
and benefits can be given by banks in lieu of interest to depositors. 
The Regulation also specifically provides that the provision or the 
receipt of such services and benefits does not constitute interest. 
Such services and benefits include for example, free printed checks, 
safe deposit and night depository facilities, low-interest loans, and 
armored car services. In Texas, numerous small title agencies, 
underwriters, and attorneys benefit from these services. The average 
title agency in Texas is a small, locally based family businesses, 
usually employing no more than six or seven employees. These agencies 
are mainstays within their communities and provide service to 
individual customers who are purchasing homes. Maintaining the current 
regulatory interpretation of interest is important to the health of 
many of these businesses. In our nation's highly developed financial 
system, Federal banking law and regulations have operated to facilitate 
the smooth and efficient flow of real estate transactions and promoted 
American homeownership. I am optimistic that these services will 
continue to be provided in the current efficient manner when H.R. 1009 
becomes law.

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