A bill to increase the number of interaccount transfers which may be made from business accounts at depository institutions, to authorize the Board of Governors of the Federal Reserve System to pay interest on reserves, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Interest Checking Act 
of 2001''.

SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED FOR ALL 
              BUSINESSES.

    Section 2 of Public Law 93-100 (12 U.S.C. 1832) is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
            (2) by inserting after subsection (a) the following:
    ``(b) Business Account Transactions Authorized.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, any depository institution may permit the owner of any 
        deposit or account that is a deposit or account on which 
        interest or dividends are paid and is not a deposit or account 
        described in subsection (a)(2), to make not more than 24 
        transfers per month (or such greater number as the Board may 
        determine, by rule or order), for any purpose, to another 
        account of the owner in the same institution.
            ``(2) Status as transaction account.--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 that Act.''.

SEC. 3. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE BANKS.

    (a) In General.--Section 19(b) of the Federal Reserve Act (12 
U.S.C. 461(b)) is amended by adding at the end the following new 
paragraph:
            ``(12) Earnings on reserves.--
                    ``(A) In general.--Balances maintained at a Federal 
                reserve bank by or on behalf of a depository 
                institution may receive earnings to be paid by the 
                Federal reserve bank not less frequently than once in 
                each calendar quarter, at a rate or rates not to exceed 
                the general level of short-term interest rates.
                    ``(B) Regulations relating to payments and 
                distribution.--The Board may prescribe regulations 
                concerning--
                            ``(i) the payment of earnings in accordance 
                        with this paragraph;
                            ``(ii) the distribution of such earnings to 
                        the depository institutions which maintain 
                        balances at such banks, or on behalf of which 
                        such balances are maintained; and
                            ``(iii) the responsibilities of depository 
                        institutions, Federal home loan banks, and the 
                        National Credit Union Administration Central 
                        Liquidity Facility with respect to the 
                        crediting and distribution of earnings 
                        attributable to balances maintained, in 
                        accordance with subsection (c)(1)(B), in a 
                        Federal reserve bank by any such entity on 
                        behalf of depository institutions.''.
    (b) Authorization for Pass Through Reserves for Member Banks.--
Section 19(c)(1)(B) of the Federal Reserve Act (12 U.S.C. 461(c)(1)(B)) 
is amended by striking ``which is not a member bank''.
    (c) Technical and Conforming Amendments.--Section 19 of the Federal 
Reserve Act (12 U.S.C. 461) is amended--
            (1) in subsection (b)(4) (12 U.S.C. 461(b)(4)), by striking 
        subparagraph (C) and redesignating subparagraphs (D) and (E) as 
        subparagraphs (C) and (D), respectively; and
            (2) in subsection (c)(1)(A) (12 U.S.C. 461(c)(1)(A)), by 
        striking ``subsection (b)(4)(C)'' and inserting ``subsection 
        (b)''.

SEC. 4. 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 which may be zero)''; and
            (2) in clause (ii), by striking ``and not less than 8 per 
        centum,'' and inserting ``(and which may be zero),''.

SEC. 5. TRANSFER OF FEDERAL RESERVE SURPLUSES.

    (a) In General.--Section 7(b) of the Federal Reserve Act (12 U.S.C. 
290) is amended by adding at the end the following new paragraph:
            ``(4) Additional transfers to cover interest payments for 
        fiscal years 2001 through 2005.--
                    ``(A) In general.--In addition to the amounts 
                required to be transferred from the surplus funds of 
                the Federal reserve banks pursuant to paragraph (1), 
                the Federal reserve banks shall transfer from such 
                surplus funds to the Board for transfer to the 
                Secretary of the Treasury for deposit in the general 
                fund of the Treasury, such sums as are necessary to 
                equal the net cost of section 19(b)(12), as estimated 
                by the Office of Management and Budget, in each of the 
                fiscal years 2002 through 2006.
                    ``(B) Allocation by federal reserve board.--Of the 
                total amount required to be paid by the Federal reserve 
                banks under subparagraph (A) for fiscal years 2002 
                through 2006, the Board shall determine the amount that 
                each such bank shall pay in any such fiscal year.
                    ``(C) Replenishment of surplus fund prohibited.--
                During fiscal years 2002 through 2006, no Federal 
                reserve bank may replenish the surplus fund of that 
                bank by the amount of any transfer by that bank under 
                subparagraph (A).''.
    (b) Technical and Conforming Amendment.--Section 7(a) of the 
Federal Reserve Act (12 U.S.C. 289(a)) is amended by adding at the end 
the following new paragraph:
            ``(3) Payment to treasury.--During fiscal years 2002 
        through 2006, any amount in the surplus fund of any Federal 
        reserve bank in excess of the amount equal to 3 percent of the 
        paid-in capital and surplus of the member banks of such bank 
        shall be transferred to the Secretary of the Treasury for 
        deposit in the general fund of the Treasury.''.

Summary: Small Business Interest Checking Act of 2001- Amends Federal banking law governing interaccount transfers to provide that a depository institution may permit owners of certain interest- or dividend-paying accounts to make up to 24 transfers monthly for any purpose to their other accounts in the same institution. Amends the Federal Reserve Act to authorize a Federal reserve bank to pay interest at least quarterly to a depository institution on any balance it maintains at the reserve bank. Repeals a specified restriction in order to authorize pass-through reserves for member banks . Reformulates the mandatory depository institution reserve ratio to: (1) one that is not greater than three percent, and may be zero, for transaction accounts of $25 million or less. And (2) reduce from eight percent to zero the minimum ratio for transaction accounts exceeding $25 million. Requires the Federal Reserve banks to transfer certain surplus funds for deposit into the general fund of the Treasury equal to the estimated net cost of making the quarterly payments of interest mandated by this Act for FY 2002 through 2006. Prohibits such banks from replenishing surplus funds by the amount of any such transfers during that time period.