Checking the float on checks

A House Banking subcommittee approved a measure last week that's sure to gladden the heart of anyone who has ever banged into a bank's check-hold policy. The bill is HR 2443, and it would limit the ``holds,'' or periods of time banks impose on deposits before allowing customers to write checks against them. Three years after the bill passes, virtually all checks would have to clear after three ``intervening business days'' -- deposit it Monday, write a check against it Friday.

The banks have fought the bill, contending that they need protection against fraud. Bounced checks are still handled manually and take several days to get back to where they were first deposited.

Consumer groups are not impressed. Only 1 percent of checks bounce, they counter, and of these, only a small proportion are fraudulent. The banks' actual interest, consumers charge, is in ``playing the float'' -- making money off the deposit before letting the customer get at it.

Insofar as the money that banks make from the float figures into their overall profitability, banks could be expected to make up the loss by charging higher fees. Competition should help keep the lid on fees. Practices that unnecessarily keep depositors from access to their own money should not be allowed just because banks feel ``they need the money.''

The check-hold bill deserves a smooth sail through Congress. Its best prospects for passage would be to include it in the next available omnibus banking bill.