The Impact of NINOWs on Deposits in Illinois
The legal authority for thrift institutions to
offer "check-like" services is being increasingly
broadened. H istorically, only commercial
banks have been permitted to offer
and provide third-party payments services
(checking accounts). However, in recent
years judicial interpretations and legislative
changes have generally eased such restrictions.
Negotiable order of withdrawal (NOW)
accounts, developed by New England thrift
institutions, and noninterest-bearing
negotiable order of withdrawal (NINOW) accounts,
issued by some state-chartered
savings and loan associations (S&Ls) in Illinois,
are important components of the current
trend.1 Legislation currently under consideration
by Congress, if enacted, would further
this trend by permitting all depository institutions,
nationwide, to offer some form of
NOW accounts.