Business Checking Modernization Act

Summary: Eliminates the minimum mandatory reserve ratios for depository institutions.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Business Checking Modernization 
Act''.

SEC. 2. AMENDMENTS RELATING TO DEMAND DEPOSIT ACCOUNTS AT DEPOSITORY 
              INSTITUTIONS.

    (a) Interest-Bearing Transaction Accounts Authorized.--
            (1) Federal reserve act.--Section 19(i) of the Federal 
        Reserve Act (12 U.S.C. 371a) is amended by inserting at the end 
        the following: ``Notwithstanding any other provision of this 
        section, a member bank may permit the owner of any deposit, any 
        account which is a deposit, or any account on which interest or 
        dividends are paid to make up to 24 transfers per month (or 
        such greater number as the Board may determine by rule or 
        order), for any purpose, to a demand deposit account of the 
        owner in the same institution. Nothing in this subsection shall 
        be construed to prevent an account offered pursuant to this 
        subsection from being considered a transaction account for 
        purposes of this Act.''.
            (2) Home owners' loan act.--
                    (A) In general.--Section 5(b)(1) of the Home 
                Owners' Loan Act (12 U.S.C. 1464 (b)(1)) is amended by 
                adding at the end the following new subparagraph:
                    ``(G) Transfers.--Notwithstanding any other 
                provision of this paragraph, a Federal savings 
                association may permit the owner of any deposit or 
                share, any account which is a deposit or share, or any 
                account on which interest or dividends are paid to make 
                up to 24 transfers per month (or such greater number as 
                the Board of Governors of the Federal Reserve System 
                may determine by rule or order under section 19(i) to 
                be permissible for member banks), for any purpose, to a 
                demand deposit account of the owner in the same 
                institution. Nothing in this subsection shall be 
                construed to prevent an account offered pursuant to 
                this subsection from being considered a transaction 
                account (as defined in section 19(b) of the Federal 
                Reserve Act) for purposes of the Federal Reserve 
                Act.''.
                    (B) Repeal.--Effective at the end of the 3-year 
                period beginning on the date of the enactment of this 
                Act, section 5(b)(1) of the Home Owners' Loan Act (12 
                U.S.C. 1464 (b)(1)) is amended by striking subparagraph 
                (G).
            (3) Federal deposit insurance act.--Section 18(g) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended by 
        adding at the end the following new paragraph:
            ``(3) Transfers.--Notwithstanding any other provision of 
        this subsection, an insured nonmember bank or insured State 
        savings association may permit the owner of any deposit or 
        share, any account which is a deposit or share, or any account 
        on which interest or dividends are paid to make up to 24 
        transfers per month (or such greater number as the Board of 
        Governors of the Federal Reserve System may determine by rule 
        or order under section 19(i) to be permissible for member 
        banks), for any purpose, to a demand deposit account of the 
        owner in the same institution. Nothing in this subsection shall 
        be construed to prevent an account offered pursuant to this 
        subsection from being considered a transaction account (as 
        defined in section 19(b) of the Federal Reserve Act) for 
        purposes of the Federal Reserve Act.''.
    (b) Repeal of Prohibition on Payment of Interest on Demand 
Deposits.--
            (1) Federal reserve act.--Section 19(i) of the Federal 
        Reserve Act (12 U.S.C. 371a) is amended to read as follows:
    ``(i) [Repealed]''.
            (2) Home owners' loan act.--The 1st sentence of section 
        5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C. 
        1464(b)(1)(B)) is amended by striking ``savings association may 
        not--'' and all that follows through ``(ii) permit any'' and 
        inserting ``savings association may not permit any''.
            (3) Federal deposit insurance act.--Section 18(g) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to 
        read as follows:
    ``(g) [Repealed]''.
    (c) Effective Date.--The amendments made by subsection (b) shall 
take effect at the end of the 3-year period beginning on the date of 
the enactment of this Act.

SEC. 3. INCREASED FEDERAL RESERVE BOARD FLEXIBILITY IN SETTING RESERVE 
              REQUIREMENTS.

    Section 19(b)(2) of the Federal Reserve Act (12 U.S.C. 461(b)(2)) 
is amended--
            (1) in clause (i), by striking ``the ratio of 3 per 
        centum'' and inserting ``a ratio not greater than 3 percent''; 
        and
            (2) in clause (ii), by striking ``and not less than 8 per 
        centum''.

            Passed the House of Representatives April 11, 2000.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.