House Bank Wasn’t Run Like One

WASHINGTON —  To understand how the House bank worked, it should not be thought of as a bank. Although it received deposits and issued and cashed checks, the members-only “bank” was not a financial institution in the usual sense. It paid no interest on deposits, extended no formal loans nor otherwise offered any of the financial services normally performed by commercial banks. Transactions involved no taxpayer money.

Rather, the bank supervised by the House sergeant-at-arms served as a depository for House members’ salaries, on which the lawmakers could draw by writing checks. But, although it paid no interest, it did offer one unusual service not available at conventional banks--a service for which many members now may pay dearly. It offered free overdraft protection.

The bank’s rules were never codified, but in practice members were routinely allowed to overdraw their accounts by any amount up to the value of their next month’s paycheck. The overdrafts were covered with funds from the accounts of other House members and repaid the following month when the member’s next paycheck was automatically deposited.