This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Business Checking Getting Interest

Stocks in this article: JPM BAC

NEW YORK ( TheStreet) -- Smaller regional and community banks are hoping to take advantage of the repeal a nearly 80-year ban on interest rates on business checking accounts that could allow them to grow their deposit base.

Till now, small businesses have had to turn to money market funds and high-interest CDs to get interest. Banks have tried to compensate small businesses by offering "earnings credits" based on deposit amounts and account activity to offset some of the checking account charges.

But now banks have the option to pay hard interest on those deposits and small players see it as an opportunity to steal some business from larger competitors that will find it difficult to make the change.

"If you are a large, mature bank, the last thing you want to do is re-price your deposits," argues Geoffery Greenwade, president and CEO of Houston, Texas-based Green Bank, which is taking the lead in its market to offer interest rates on checking accounts. "For a bank like ours which has grown from $230 million in assets to $1 billion in five years, we can put that money to work. If I can take some business away from Chase (JPM) or Bank of America (BAC), I can then lend that money."

The little known change took place July 21st as part of the implementation of the Dodd-Frank Act and removed the business checking interest ban. The provision was originally intended to curb speculative lending, but regulators appear to have concluded that curtailing banks' ability to attract core deposits does not prevent them from making risky investments.

So far, Greenwade says his competitors are taking a "wait-and-see attitude", but he expects that they will soon follow his lead. "This is a much better way to attract core deposits. I would much rather get $20 million in an interest-bearing checking account than $20 million in high-interest yielding CDs."

Some industry observers expect banks would likely hike lending rates to help pay for the higher cost of deposits. Green Bank expects to make most of its money from volumes rather than spreads. "Deposits are the fuel and loans are the engine. The more deposits I attract, the more I can lend," said Greenwade.

--Written by Shanthi Bharatwaj in New York

>To contact the writer of this article, click here: Shanthi Bharatwaj.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs