Business Bills Will Bring Overdue Reforms.

LOST in the din of the debate over such issues as campaign finance reform, the energy crisis, the Patient's Bill of Rights and the federal budget, Congress has been considering legislation of special importance to the business community.

In particular, I have been in the lead of two legislative efforts: to repeal the ban on paying interest on business checking accounts and to reduce Securities and Exchange Commission fees imposed on stock transactions.

As part of the Banking Act of 1933, Congress banned interest payments on business checking accounts. Back then, there was a concern that the nation's larger banks might use interest payments to lure deposits away from small, rural banks in order to finance stock market speculation.

This concern does not exist in today's competitive financial marketplace. In fact, the ban on paying interest on business checking accounts increasingly has been perceived as a burden, particularly for small banks and businesses.

The current system places smaller banks at a disadvantage in attracting deposits from larger businesses, which have every incentive to seek higher returns on their assets in money market mutual fund accounts and other interest-bearing investment vehicles.

Large commercial depositors also have found alternative ways to minimize their holdings in non-interest bearing checking accounts, through the use of "sweep" programs whereby funds in such accounts are transferred nightly into bank passbook accounts.

The Small Business Interest Checking Account Act of 2001 repeals the outdated ban and allows banks to pay interest. On April 3, 2001, the House of Representatives passed the measure. I am optimistic that the Senate will act quickly and send this important legislation to the President for his signature.

Another business-related bill is the Investor and Capital Markets Fee Relief Act. This legislation reduces all SEC fees, including chiefly transaction fees imposed on every stock trade. These fees were initially imposed to recover the cost to the government for regulating the securities industry.

As investing in securities has become more popular, SEC fees have generated significant revenues -- $28.9 billion (estimated FY2002-2011) -- and have become a tax on using the securities markets. The fees that the legislation would reduce currently generate more than double the amount of revenue needed to cover the cost of regulating the securities industry.

The bill adjusts the fees on a schedule, which would reduce the fees by about 50 percent over the next 10 years. The legislation also directs the SEC to set the new reduced-fee rates annually, based on the estimated cost of providing services to securities investors and overseeing the securities markets. The House passed this bill on June 14, and the Senate is expected to consider the legislation later this year. This should save investors an estimated $14 billion over the next ten years.

Although practical adjustments to laws governing business transactions don't promise banner headlines, they remain necessary and hold significant benefits for the business community.

Brad Sherman is a Democratic congressman representing portions of the San Fernando and Conejo Valleys, the Las Virgenes Area and Malibu.