Thursday marks the one-year anniversary of the date the Dodd-Frank Wall Street Reform act became law, and it is also the day many of the law’s provisions take effect. Some of those measures are controversial, like new enforcement powers for the Consumer Financial Protection Bureau and new limits on the fees banks can charge merchants for debit card transactions. Others have almost entirely escaped noticed. Among the little-discussed changes: a Depression-era ban on paying interest on business checking accounts has finally been retired. And big banks are quickly — and for the most part quietly — adapting.
Large companies with big deposits have long been able to get around the prohibition by using so-called sweep accounts, which invest deposits in money market accounts each night and then return the funds the next day. Sweep accounts, however, are an inefficient and expensive way to earn interest. Effective Thursday, with the repeal of what was once — long ago — called Regulation Q, several large banks will begin to offer interest-bearing checking accounts to all business customers. The banks include Capital One, Citibank, TD Bank, and Wells Fargo. Regions Bank plans to begin offering interest accounts to business customers on Aug. 1, and a spokeswoman for Fifth Third Bank, based in Cincinnati, said interest-earning checking for companies “is in the works.”
The two largest American banks, Bank of America and Chase, had not made a decision as of Wednesday, according to spokespeople for each. “We’re currently reviewing different options but have no immediate plans to alter any existing products or add a new one,” said Jefferson George, a spokesman for Bank of America, in an e-mail. (Mr. George added that Bank of America, like many banks, offers interest accounts to sole proprietors, nonprofits and government entities.)
Several other large banks have not responded to The Agenda’s request for information, and that seems to be in keeping with a widespread silence on the topic. One bank spokesperson — who insisted on anonymity — said that the change was trivial: “Interest-bearing checking is not a new thing. It’s available to more businesses now, but a large portion of our customer base already had access to it.”
Moreover, according to the spokesperson, interest isn’t very important to small-business owners. “They’re probably more interested in having their fees waived,” the spokesperson said. “In today’s environment, an account with $10,000 is likely to earn between $3 and $8 a month. In comparison, average monthly service fees industry-wide are $10 to $20 a month. By having them waived, you can save $120 a year.”
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