James A. Leach: “under current law, there is a prohibition on the payment of interest on demand deposits, particularly as they affect…”

“under current law, there is a prohibition on the payment of interest on demand deposits, particularly as they affect business institutions. This prohibition has been in law since 1933. What this bill does is offer and allow banks the right to make daily sweep adjustments and interest to be paid in these daily sweeps to business accounts, and then eventually, that is, at the end of 3 years, for the prohibition on the payment of demand interest to be fully removed. In essence, this bill symbolically is the most pro-customer banking legislation in modern times. It is pro-small business, for it will allow for the first time small businesses, in small rural settings in particular, to be paid interest on their hard-earned extra funds or savings. It is pro-small bank because small banks are not in a position to use some of the sophisticated techniques of their larger bank competitors in this particular arena. It is pro-competition because it simply says the market should act freely without legislative intervention. The market today is stilted. One reason banks in the savings business have been declining in size is because of legislative protectionism of this kind of nature.”