POLITICS : Your Check vs. a House Member’s

The U.S. House of Representatives has been shaken by a scandal so sweeping that some analysts believe it could result in the ouster by voters of an untold number of House members come November. The House is disclosing the names of 355 members and former members who cashed hundreds of thousands of dollars in bad checks against their accounts containing insufficient funds at the now-defunct House bank. The disclosure has become a symbol of a pampered Congress out of touch with the folks back home.

THE CHARGE

A House Ethics Committee investigation found that in a single 39-month period 20,000 checks were written without sufficient funds to cover them. One congressman alone cashed 996 such checks in the period reviewed by the committee.

THE RESPONSE

House members say the bank had always permitted its members to write overdrafts and often did not even notify them as long as the amount was covered by their next paycheck. The checks were covered by using money from other members’ accounts.

A TYPICAL TRANSACTION

COMMERCIAL BANK

1) You write a check to buy a pair of shoes.

2) The shoe store owner deposits check at his bank.

3) His bank sends check to Federal Reserve Bank.

4) Fed transfers the money between banks and sends the check on to your bank.

5) Your bank finds there isn’t enough money in your account.

6) If you do not have overdraft protection, the check is bounced and you are charged a fee, usually around $20.

7) Check is returned to the Fed, which sends it back to shoe store owner’s bank and reverses the transfer of funds.

8) Bank returns the check to canoe dealer and charges him $5 for the trouble. You may face misdemeanor or felony charges in some cases.

HOUSE BANK

1) House member writes check to buy a canoe.

2) The shoe store owner deposits check at his bank.

3) His bank sends check to Federal Reserve Bank.

4) Fed transfers funds to shoe store owner’s bank and sends check to House bank.

5) House bank pays Fed for check, then finds there isn’t enough money in account.

6) House bank lets check float for up to 30 days. Check is charged to House member’s account after next payday.

Sources: Congressional Quarterly, Times staff reports