I 

108TH CONGRESS 

1ST SESSION H. R. 758

To allow all businesses to make up to 24 transfers each month from interestbearing transaction accounts to other transaction accounts, to require 

the payment of interest on reserves held for depository institutions at 

Federal reserve banks, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2003

Mrs. KELLY (for herself, Mrs. MALONEY, Mrs. CAPITO, Mr. SHERMAN, and 

Mr. MOORE) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL

To allow all businesses to make up to 24 transfers each 

month from interest-bearing transaction accounts to 

other transaction accounts, to require the payment of 

interest on reserves held for depository institutions at 

Federal reserve banks, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Business Checking 

5 Freedom Act of 2003’’. 
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1 SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AU2 THORIZED FOR ALL BUSINESSES. 

3 Section 2 of Public Law 93–100 (12 U.S.C. 1832) 

4 is amended—

5 (1) by redesignating subsections (b) and (c) as 

6 subsections (c) and (d), respectively; and 

7 (2) by inserting after subsection (a) the fol8 lowing: 

9 ‘‘(b) Notwithstanding any other provision of law, any 

10 depository institution may permit the owner of any deposit 

11 or account which is a deposit or account on which interest 

12 or dividends are paid and is not a deposit or account de13 scribed in subsection (a)(2) to make up to 24 transfers 

14 per month (or such greater number as the Board of Gov15 ernors of the Federal Reserve System may determine by 

16 rule or order), for any purpose, to another account of the 

17 owner in the same institution. An account offered pursu18 ant to this subsection shall be considered a transaction 

19 account for purposes of section 19 of the Federal Reserve 

20 Act unless the Board of Governors of the Federal Reserve 

21 System determines otherwise.’’. 

22 SEC. 3. PAYMENT OF INTEREST ON RESERVES AT FEDERAL 

23 RESERVE BANKS. 

24 (a) IN GENERAL.—Section 19(b) of the Federal Re25 serve Act (12 U.S.C. 461(b)) is amended by adding at 

26 the end the following new paragraph: 
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1 ‘‘(12) EARNINGS ON RESERVES.—

2 ‘‘(A) IN GENERAL.—Balances maintained 

3 at a Federal reserve bank by or on behalf of a 

4 depository institution may receive earnings to 

5 be paid by the Federal reserve bank at least 

6 once each calendar quarter at a rate or rates 

7 not to exceed the general level of short-term in8 terest rates. 

9 ‘‘(B) REGULATIONS RELATING TO PAY10 MENTS AND DISTRIBUTION.—The Board may 

11 prescribe regulations concerning—

12 ‘‘(i) the payment of earnings in ac13 cordance with this paragraph; 

14 ‘‘(ii) the distribution of such earnings 

15 to the depository institutions which main16 tain balances at such banks or on whose 

17 behalf such balances are maintained; and 

18 ‘‘(iii) the responsibilities of depository 

19 institutions, Federal home loan banks, and 

20 the National Credit Union Administration 

21 Central Liquidity Facility with respect to 

22 the crediting and distribution of earnings 

23 attributable to balances maintained, in ac24 cordance with subsection (c)(1)(A), in a 
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1 Federal reserve bank by any such entity on 

2 behalf of depository institutions. 

3 ‘‘(C) DEPOSITORY INSTITUTIONS DE4 FINED.—For purposes of this paragraph, the 

5 term ‘depository institution’, in addition to the 

6 institutions described in paragraph (1)(A), in7 cludes any trust company, corporation orga8 nized under section 25A or having an agree9 ment with the Board under section 25, or any 

10 branch or agency of a foreign bank (as defined 

11 in section 1(b) of the International Banking Act 

12 of 1978).’’. 

13 (b) AUTHORIZATION FOR PASS THROUGH RESERVES

14 FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed15 eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by 

16 striking ‘‘which is not a member bank’’. 

17 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

18 Section 19 of the Federal Reserve Act (12 U.S.C. 461) 

19 is amended—

20 (1) in subsection (b)(4) (12 U.S.C. 461(b)(4)), 

21 by striking subparagraph (C) and redesignating sub22 paragraphs (D) and (E) as subparagraphs (C) and 

23 (D), respectively; and 
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1 (2) in subsection (c)(1)(A) (12 U.S.C. 

2 461(c)(1)(A)), by striking ‘‘subsection (b)(4)(C)’’ 

3 and inserting ‘‘subsection (b)’’. 

4 SEC. 4. INCREASED FEDERAL RESERVE BOARD FLEXI5 BILITY IN SETTING RESERVE REQUIRE6 MENTS. 

7 Section 19(b)(2)(A) of the Federal Reserve Act (12 

8 U.S.C. 461(b)(2)(A)) is amended—

9 (1) in clause (i), by striking ‘‘the ratio of 3 per 

10 centum’’ and inserting ‘‘a ratio not greater than 3 

11 percent (and which may be zero)’’; and 

12 (2) in clause (ii), by striking ‘‘and not less than 

13 8 per centum,’’ and inserting ‘‘(and which may be 

14 zero),’’. 

15 SEC. 5. TRANSFER OF FEDERAL RESERVE SURPLUSES. 

16 (a) IN GENERAL.—Section 7(b) of the Federal Re17 serve Act (12 U.S.C. 289(b)) is amended by adding at 

18 the end the following new paragraph: 

19 ‘‘(4) ADDITIONAL TRANSFERS TO COVER IN20 TEREST PAYMENTS FOR FISCAL YEARS 2003

21 THROUGH 2007.—

22 ‘‘(A) IN GENERAL.—In addition to the 

23 amounts required to be transferred from the 

24 surplus funds of the Federal reserve banks pur25 suant to subsection (a)(3), the Federal reserve 
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1 banks shall transfer from such surplus funds to 

2 the Board of Governors of the Federal Reserve 

3 System for transfer to the Secretary of the 

4 Treasury for deposit in the general fund of the 

5 Treasury, such sums as are necessary to equal 

6 the net cost of section 19(b)(12) in each of the 

7 fiscal years 2003 through 2007. 

8 ‘‘(B) ALLOCATION BY FEDERAL RESERVE

9 BOARD.—Of the total amount required to be 

10 paid by the Federal reserve banks under sub11 paragraph (A) for fiscal years 2003 through 

12 2007, the Board of Governors of the Federal 

13 Reserve System shall determine the amount 

14 each such bank shall pay in such fiscal year. 

15 ‘‘(C) REPLENISHMENT OF SURPLUS FUND

16 PROHIBITED.—During fiscal years 2003 

17 through 2007, no Federal reserve bank may re18 plenish such bank’s surplus fund by the amount 

19 of any transfer by such bank under subpara20 graph (A).’’. 

21 (b) TECHNICAL AND CONFORMING AMENDMENT.—

22 Section 7(a) of the Federal Reserve Act (12 U.S.C. 

23 289(a)) is amended by adding at the end the following 

24 new paragraph: 
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1 ‘‘(3) PAYMENT TO TREASURY.—During fiscal 

2 years 2003 through 2007, any amount in the sur3 plus fund of any Federal reserve bank in excess of 

4 the amount equal to 3 percent of the paid-in capital 

5 and surplus of the member banks of such bank shall 

6 be transferred to the Secretary of the Treasury for 

7 deposit in the general fund of the Treasury.’’.

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