US House Panel OKs Fed to pay banks interest
The first piece of legislation allows the US Federal Reserve to pay interest on bank deposits kept at the central bank. It also gives the Fed greater flexibility in setting reserve requirements.
The House Financial Services subcommittee on financial institutions and consumer credit also adopted a separate bill that allows commercial banks to pay interest on business checking accounts."Banks deserve to earn interest on their reserves, and small businesses deserve a return on their checking deposits. Government policy is simply wrong in these two areas," said House Financial Services Chairman Michael Oxley, R-Ohio.
Congress banned banks from paying interest on business checking accounts in 1933. Similar legislation has been introduced in the US Senate.
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