House Members Have Their Own Bank, but Bouncing Checks No Longer Allowed

The House bank, a $50-million-a-year operation that is run by the House sergeant-at-arms as a free check-writing and check-cashing service for the convenience of members, will no longer permit customers to repeatedly overdraw their accounts, according to congressional sources.

In the past, House members could write checks that exceeded their account balances at the sergeant-at-arms bank without any penalty. They were given 24 hours to cover the overdrafts, but if they did not, the bank would do nothing as long as the outstanding checks did not exceed the members’ next payroll check or roughly $5,000, the sources said.

A General Accounting Office audit of the bank released earlier this month reported that on an average day, the bank was holding 30 checks for insufficient funds on members’ accounts. In the 12 days sampled in the audit, the GAO found “these (overdrawn) checks had been written by more than 90 members of the House.”

One member, who asked not to be identified, said his colleagues and spouses liked to use the sergeant-at-arms checks “because they have the Capitol on them and look so official.”

By law, the payroll for House members is placed in the hands of the sergeant-at-arms. Each month, if he or she so wishes, a member’s pay is placed in an individual account maintained in the sergeant-at-arms bank. Some members also deposit other funds in these accounts, including checks received for speaking fees and other services.

As with a normal bank, the sergeant-at-arms bank provides each member with a monthly statement. Unlike other banks, however, the House bank is not chartered, was not established by legislation and operates under informal rules.

For example, there is a disagreement over how long the bank should maintain records of its accounts. Because those records can and have been subpoenaed with approval of the House in criminal cases involving members, some members want to limit the time they are maintained before being destroyed.

The sergeant-at-arms bank does have a relationship with the National Bank of Washington (NBW), which clears checks deposited or cashed at the House facility. NBW, in turn, provides the cash used to pay those who are permitted to cash checks at the bank, which is located just inside an entrance on the House side of the Capitol.

Almost $200,000 in cash is held at the bank each day to take care of the check-cashing operation. NBW is not paid for its services, which an NBW official estimated was worth less than $25,000 a year. Instead, according to the NBW official, the Treasury maintains a deposit of “about $1 million” at NBW.

A Capitol Hill employee who had a chance to look at the bank’s operations a couple of years ago was surprised to find bounced checks pinned to a cork board waiting to be made good by members and staffers. “Some of the sergeant-at-arms checks that had insufficient funds were signed by members’ wives or girlfriends,” the employee said.

A House official said some of the overdrafts were caused when families and authorized staff members “did not coordinate their handling of the accounts.”

A computerized list of overdrawn accounts is now being kept by Deputy Sergeant-at Arms Charles A. Mallon, the bank’s director. Mallon has the responsibility to report to Speaker Thomas S. Foley (D-Wash.) the name of any member who “misuses” his or her account.

House Sergeant-at-Arms Jack Russ, who the GAO said overdrew his account at the House bank, including one overdraft for more than $10,000, no longer has any dealings with the bank.

The GAO found that in some instances members received another benefit regarding overdrafts.

When checks such as payments of honorariums to members bounced, the bank kept the members’ accounts credited for the money while they attempted to resubmit the checks for collection. In the future, under new procedures, the sergeant-at-arms bank will immediately reduce the member’s account for the amount of the returned check and leave it to the member to seek to collect what is due him or her.