Treasurers who thought the ambitious Dodd-Frank financial reform bill would not disrupt routine cash management operations are getting a wake-up call. While over-the-counter derivatives rules and rating agency regulation attracted the most attention from treasury pros in the run-up to the bill's passage, they're now discovering that the repeal of Regulation Q could change how they deal with overnight account balances. And alterations in the coverage for bank accounts provided by the Federal Deposit Insurance Corp. could mean new banking fees and changes in how account analysis statements are handled.
Now that Reg Q is completely defunct, banks are free to pay interest on corporate checking account balances for the first time since the Depression. Just how much that will affect where cash managers keep corporate funds remains to be seen.
Some expect it to be a nonevent. What banks decide to do about paying interest on demand deposit account (DDA) balances "will not affect the way we manage cash," says George Zinn, treasurer at cash-rich Microsoft. "We already use [zero-balance accounts] to keep balances minimal and will continue to do so."
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