Mr. Chairman, I want to commend you for holding this hearing and for your leadership in this area, I also extend my commendations to Senators Shelby and Mack. I appreciate their perseverance and hard work in attempting to remove unnecessary regulatory burdens. This is an important issue. It is always important when we are able to make a system more efficient in its performance and more cost-effective to its users. That, to me, is the essence of regulatory reform.

This is not the kind of issue that usually leaps into the headlines, but inefficiencies are apparent to banking system users and unregulated institutions are quick to sense their competitive advantages. Even for those unfamiliar with the reasons why, extended delays in service, lack of responsiveness, and higher costs for needless practices and procedures are some of the experiences we all share when the banking system does not function smoothly and without needless regulatory burdens. Some regulatory constraints are necessary to protect users of the system, some are necessary to ensure safety and soundness, but generally, the fewer regulatory burdens, the better our financial system performs.

We have before us today two issues that recognize the cost of money, and allow for interest to be paid on those funds. Section 1 01 of S. 1 405 permits the Fed to pay a market rate of interest on required reserves, and section 102 permits banks and thrifts to pay a market rate of interest on demand deposits, or checking accounts, as most of us know them. I am generally supportive of these measures and look forward to reviewing the testimony of our witnesses today.

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