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WASHINGTON, D.C. –America’s Community Bankers said it supports a bill reported by the House Banking Committee today to give community banks an additional tool to serve small business customers. The bill, H.R. 4067, would give banks the option of paying interest on business checking accounts.

ACB has been pursuing this much-needed reform since 1996, after member banks complained that the alternative to interest-bearing accounts was complex and costly “sweep” operations.

“For far too long, community banks have been prevented from offering these products, thereby weakening their competitive position and denying small businesses the opportunity to earn interest on their demand deposit accounts,” said Robert R. Davis, ACB’s director of government relations.

ACB worked closely with Rep. Jack Metcalf (R-Wash.) and House Banking Committee Chairman Jim Leach (R-Iowa) to bring about the bill to repeal the Depression-era law that prohibits banks from paying interest on business checking accounts.

While ACB favored repeal of the prohibition without further delay, in order to move the bill ACB supported a manager’s amendment that puts off the repeal for three years and, as a transition, expands the allowable number of sweeps each month to 24 from the current six.

ACB supports S. 576, which would permit interest to be paid on business checking accounts as of Jan. 1, 2001.