I
105TH CONGRESS
1ST SESSION
H. R. 2323
To allow depository institutions to offer negotiable order of withdrawal ac-
counts to all businesses, to repeal the prohibition on the payment of
interest on demand deposits, to require the Board of Governors of the
Federal Reserve System to pay interest on certain reserves, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 31, 1997
Mr. METCALF (for himself, Mr. LAZIO of New York, and Mr. KANJORSKI) in-
troduced the following bill; which was referred to the Committee on
Banking and Financial Serivces
A BILL
To allow depository institutions to offer negotiable order
of withdrawal accounts to all businesses, to repeal the
prohibition on the payment of interest on demand depos-
its, to require the Board of Governors of the Federal
Reserve System to pay interest on certain reserves, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Small Business Bank-
ing Act of 1997’’.
SEC. 2. AMENDMENTS RELATING TO SAVINGS AND DEMAND
DEPOSIT ACCOUNTS AT DEPOSITORY INSTI-
TUTIONS.
(a) NOW ACCOUNTS AUTHORIZED FOR ALL BUSI-
NESSES.—Section 2 of Public Law 93–100 (12 U.S.C.
1832(a)(2)) is amended to read as follows:
‘‘SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFER-
ABLE INSTRUMENTS FOR TRANSFERS TO
THIRD PARTIES.
‘‘Notwithstanding any other provision of law, any de-
pository institution (as defined in section 3 of the Federal
Deposit Insurance Act) may permit the owner of any de-
posit or account to make withdrawals from such deposit
or account by negotiable or transferable instruments for
the purpose of making payments to third parties.’’.
(b) REPEAL OF PROHIBITION ON PAYMENT OF IN-
TEREST ON DEMAND DEPOSITS.—
(1) Section 19 of the Federal Reserve Act (12
U.S.C. 371a) is amended by striking subsection (i).
(2) 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 as-
sociation may not—’’ and all that follows through
‘‘(ii) permit any’’ and inserting ‘‘savings association
may not permit any’’.
(3) Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by striking sub-
section (g).
SEC. 3. PAYMENT OF INTEREST ON RESERVES AT FEDERAL
RESERVE BANKS.
(a) IN GENERAL.—Section 19(b) of the Federal Re-
serve 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 to meet the reserve re-
quirements of this subsection applicable with re-
spect to such depository institution shall receive
earnings to be paid by the Federal reserve bank
at least once each calendar quarter at a rate
not to exceed the rate earned on the securities
portfolio of the Federal Reserve System during
the preceding quarter.
‘‘(B) REGULATIONS
RELATING
TO
PAY-
MENTS AND DISTRIBUTION.—The Board may
prescribe regulations concerning—
‘‘(i) the payment of earnings in ac-
cordance with this paragraph;
‘‘(ii) the distribution of such earnings
to the depository institutions which main-
tain balances at such banks or on whose
behalf 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 ac-
cordance with subsection (c)(1)(B), in a
Federal reserve bank by any such entity on
behalf of depository institutions which are
not member banks.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
(1) Section 19(b)(4) of the Federal Reserve Act
(12 U.S.C. 461(b)(4)) is amended by striking sub-
paragraph (C).
(2) Section 19(c)(1)(A) of the Federal Reserve
Act (12 U.S.C. 461(c)(1)(A)) is amended by striking
‘‘subsection (b)(4)(C)’’ and inserting ‘‘subsection
(b)’’.
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