Page 6-Thursday, June 14, 1979-The Michigan Daily
STARTS FRIDAY!
The FIRST Certified
Crazy Person's
Comedy.
Bank exec
says bill may
hurt small
depositors
WASHINGTON (AP) - Small banks
and small savers would be the losers if
Congress legalizes interest-bearing
checking accounts nationwide,
representatives of rural and suburban
banks said yesterday.
However, Rep. Fernand St. Germain,
(D-R.I.), disputed the claim, arguing
that experiments with so-called NOW
accounts in New England and New
York have earned consumers money
and not led to bank failures.
Raymond Campbell, president of the
Independent Bankers of America, told
a House Banking subcommittee that
because NOW accounts are offered by
banks at a financial loss, they could
drive many small banks out of
business.
CAMPBELL also claimed that in-
terest-paying checking accounts would
force banks to assess high service
charges, making the accounts expen-
sive for small depositors who write lar-
ge numbers of checks.
St. Germain, subcommittee chair-
man and sponsor of the NOW account
bill, contended that Campbell's bleak
predictions have not been borne out by
the experience in New England and
New York.
St. Germain said New England con-
sumers have received much more in in-
terest on NOW accounts than they have
paid in service charges and "there has
been no rash of bank failures"
"WE WOULD concede that the con-
sumers in New England are benefitting
from NOW accounts," responded Cam-
pbell. But he added that those benefits
result from a "competitive environ-
ment that can't go on for long."
Congress is considering legislation to
permit interest-paying checking ac-
counts nationwide in face of a court-
imposed deadline of Jan. 1. Last April,
a U.S. Appeals Court in Washington
banned savings-to-checking automatic
transfers and similar devices that ef-
fectively offer consumers interest on
checking accounts.
However, the court delayed the effec-
tive date of its ruling until Jan. 1ito give
Congress time to decide whether such
interest-paying checking accounts
should be legal across the country. The
court ruling did not affect New England
and New York, where NOW accounts
have been legal for several years.
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