Green Bank Among First To Offer Business Checking With Interest In Nearly 80 Years

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Green Bank Among First To Offer Business Checking With Interest In Nearly 80 Years


HOUSTON, July 21, 2011 – For the first time since the 1930s, businesses will be able to open interest-bearing checking accounts, and Houston-based Green Bank is leading the charge on making the product available. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, signed into law last year, contains several amendments that go into effect on July 21, one year after passage. Section 627 of the Act, “INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED,” is one such amendment.


Before now, The Banking Act of 1933 imposed broad limitations on interest-bearing bank accounts, including savings accounts and consumer checking accounts.  Many of these limitations were eased – or repealed – in the decades that followed, but the law prohibiting financial institutions from paying interest on business checking accounts, known as “Reg Q,” remained on the books. 


That remaining restriction is lifted with the activation of Section 627, which will allow – though not require – banks to pay interest on business checking accounts.  As one of the first to market with this offering, Green Bank will make saving an easier option for Texas businesses, providing them an additional option in cash management strategies.


“We have a deep commitment to Texas businesses, and now we can offer them another meaningful choice to help them operate at peak performance,” said Green Bank President Geoff Greenwade.  “This gives us another tool to attract deposits that we can turn around and lend to businesses, allowing those companies to grow and – ideally – add employees along the way.”


Green Bank’s new choice has the potential to simplify cash management for many companies. The Dodd-Frank Act also raises the deposit amount protected by FDIC coverage, and the ability to get interest on a greater range of deposits may provide a buffer when it comes to consolidating accounts. The change could level the playing field between bank accounts and other investment options, which will be seen as a positive by many commercial clients.


Green Bank will continue to offer checking accounts with an earnings credit rate (ECR), giving business clients a strategic choice regarding which sort of accounts to utilize.  ECR was a widely used legal alternative under Reg Q’s interest prohibitions, allowing banks to offset certain fees with earnings credits based on deposit amounts and account activity. Green Bank clients now have the choice to assess account activities and metrics, choosing which solution is right for them: interest on balances or ECR.


“The choice will come down to the specific needs of each business,” said Greenwade.  “Whether they need a full complement of treasury management services or if they require only a minimum of service and monthly transactions, we’re able to provide a strategic solution that’s best for them.”