Response Tepid as Reg Q Repeal Nears

Low rates to tamp demand for interest-bearing accounts for now.

Dub Newman of Bank of America Dub Newman of Bank of America

As mandated by the Dodd-Frank Act, on July 21 Reg Q, which has prohibited banks from paying interest on business checking accounts since the 1930s, will disappear. But thanks to low interest rates and unlimited deposit insurance available on non-interest-bearing accounts until 2012, banks expect don’t expect a huge dash for interest-bearing accounts.

Citi plans to offer interest-bearing accounts to business customers, and expects no more than1% to 2% of corporate and institutional balances to shift to interest-bearing demand deposit accounts, says Michael Berkowitz, head of North American liquidity, investments and information services at Citi Global Transaction Services.

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