[Congressional Record (Bound Edition), Volume 146 (2000), Part 4]
[Extensions of Remarks]
[Page 5853]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  BUSINESS CHECKING MODERNIZATION ACT

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                               speech of

                          HON. WALTER B. JONES

                           of north carolina

                    in the house of representatives

                        Tuesday, April 11, 2000

  Mr. JONES of North Carolina. Mr. Speaker, today I support H.R. 4067, 
the ``Business Checking Modernization Act'' and urge my House 
colleagues who will be conferees negotiating with the Senate on this 
important legislation, to work for the inclusion of two specific 
provisions in any Conference Report.
  Mr. Speaker, H.R. 4067 repeals certain banking laws to allow banks to 
pay interest on commercial checking accounts. The House of 
Representatives passed very similar legislation on October 9, 1998 by a 
unanimous vote. However, that legislation also included a key 
provision--allowing the Federal Reserve to pay interest on ``sterile 
reserves''. This feature should be added to H.R. 4067 because the bill 
as currently drafted would establish additional reservable accounts 
without providing for the payment of interest on sterile reserves 
required by the Federal Reserve for those accounts. In effect, the bill 
imposes new costs on banks without providing a way to offset those new 
expenses.
  In addition, the bill currently before the House includes a phase-in 
period of three years before the law is changed to allow banks to pay 
interest on commercial checking accounts. While the bill passed in 1998 
included a longer transition period than the current version before the 
House, a transition period of no less than three years is critical 
because the bill will be significantly changing the way banks have 
conducted their relationships with their customers. Under current law, 
banks have structured relationships with their business customers 
taking into account the prohibition against the payment of interest on 
commercial checking accounts. Banks frequently provide a variety of 
other services, and a sufficient transition period is needed to allow 
banks the opportunity to enter into new relationships with their 
commercial customers.
  H.R. 4067 provides a three-year transition period, which I strongly 
urge my colleagues who negotiate the Conference Report to retain. Any 
shorter period would place an undue hardship on current banking 
customer relationships. I understand that House Banking Committee 
Chairman Leach is supportive of these provisions, and I urge my 
colleagues to include these important provisions in any Conference 
Report, and reject any effort to shorten the transition period of three 
years in the bill.

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