I
105TH CONGRESS
1ST SESSION
H. R. 1442
To amend the Federal Reserve Act to expand the opportunity for private
enterprise to compete with the Board of Governors of the Federal Re-
serve System in the provision of check-clearing and other services, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 24, 1997
Mr. GONZALEZ (for himself and Mrs. MALONEY of New York) introduced the
following bill; which was referred to the Committee on Banking and Fi-
nancial Services
A BILL
To amend the Federal Reserve Act to expand the opportunity
for private enterprise to compete with the Board of Gov-
ernors of the Federal Reserve System in the provision
of check-clearing and other services, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; PURPOSES.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Federal Reserve Free Enterprise Act’’.
(b) PURPOSES.—The purposes of this Act are as
follows:
(1) To facilitate the development of private en-
terprise and jobs by promoting competition with the
Board of Governors of the Federal Reserve System
(hereafter in this section referred to as the ‘‘Board’’)
in the provision of check-clearing and other services.
(2) To further promote such competition by
having the Board fairly and accurately price the
services provided by the Board or any Federal re-
serve bank.
(3) To save taxpayer funds by eliminating the
subsidy the Board provides through the maintenance
of a pricing system for check-clearing and other
services which does not fully recover the cost of pro-
viding such services.
(4) To end the practice of the Board of bun-
dling together all the costs and revenue from all
check-clearing and other services provided by the
Board or any Federal reserve bank and require the
Board to price each readily identifiable component of
each such service in a way that ensures that the full
amount of the costs incurred which are allocable to
the provision of such component is fully recovered.
(5) To stimulate innovation and provide a wider
range of check-clearing and other services through
market competition and the free flow of information.
SEC. 2. COMPETITIVE PRICING OF SERVICES.
(a) CLARIFICATION OF FEE SCHEDULE REQUIRE-
MENTS.—
(1) IN GENERAL.—Section 11A(b) of the Fed-
eral Reserve Act (12 U.S.C. 248a(b)) is amended by
striking paragraph (2) and all that follows through
paragraph (8) and inserting the following new para-
graphs:
‘‘(2) check processing involving sorting and
routing paper checks, and settlement services;
‘‘(3) electronic funds transfer services;
‘‘(4) automated clearinghouse services;
‘‘(5) electronic cashletter services;
‘‘(6) securities safekeeping services;
‘‘(7) check image capture services;
‘‘(8) check truncation services;
‘‘(9) image archive warehousing services;
‘‘(10) electronic check presentation services;
‘‘(11) adjustment of incorrect debits or credits
services;
‘‘(12) return of ‘bad’ checks services;
‘‘(13) transportation of paper checks services in
the clearing process;
‘‘(14) presentation point services;
‘‘(15) payor bank service or controlled disburse-
ments services;
‘‘(16) any other service which the Board offers,
directly or through a Federal reserve bank; and
‘‘(17) each readily identifiable component of
any service described in a preceding paragraph.’’.
(2) PUBLICATION WITHIN 60 DAYS.—Before the
end of the 60-day period beginning on the date of
the enactment of this Act, the Board of Governors
of the Federal Reserve System shall publish a revi-
sion of the schedule of fees required under section
11A of the Federal Reserve Act which reflects the
changes required in the schedule because of the
amendment made by paragraph (1).
(b) PRICING
OF SERVICE COMPONENTS.—Section
11A of the Federal Reserve Act (12 U.S.C. 248a) is
amended—
(1) by redesignating subsections (d) and (e) as
subsections (e) and (f), respectively: and
(2) by inserting after subsection (c) the follow-
ing new subsection:
‘‘(d) PRICING OF SERVICE COMPONENTS.—
‘‘(1) REQUEST
FOR
SEPARATE
PRICING
OF
COMPONENT.—If—
‘‘(A) any person seeks to compete with the
Board or any Federal reserve bank in the provi-
sion of any component of any service referred to
in subsection (b); and
‘‘(B) the Board has not provided an ex-
plicit price for such component in the fee sched-
ule maintained by the Board under this section,
such person may submit a description of the service
to be provided and a request for a statement of an
explicit price for the provision of such component by
the Board or bank.
‘‘(2) ACTION ON REQUEST.—Except as provided
under paragraph (3), the Board shall—
‘‘(A) comply with any request submitted
under paragraph (1); and
‘‘(B) include the price in the schedule of
fees maintained by the Board before the end of
the 60-day period beginning on the date the
Board receives such request.
‘‘(3) FRIVOLOUS AND MERITLESS REQUEST.—
The Board may decline any request under paragraph
(1) which the Board determines, in accordance with
regulations which the Board shall prescribe, is frivo-
lous and without any merit whatsoever if the Board
publishes a notice of the findings and conclusions of
the Board with regard to such determination.’’.
(c) DOCUMENTATION.—Section 714 of title 31,
United States Code, is amended by adding at the end the
following new subsection:
‘‘(e) REVIEW OF PRICING OF SERVICES PROVIDED
BY THE FEDERAL RESERVE SYSTEM.—
‘‘(1) IN GENERAL.—The Comptroller General
shall conduct an annual audit of the Board of Gov-
ernors of the Federal Reserve System and the Fed-
eral reserve banks to determine whether the require-
ments of subsection (c)(3) of section 11A of the
Federal Reserve Act are being met with respect to
each component of any service referred to in sub-
section (b) of such section.
‘‘(2) DOCUMENTATION.—Notwithstanding any
restriction in this section or any other provision of
law relating to the scope of any audit of the Board
of Governors of the Federal Reserve System or any
Federal reserve bank by the Comptroller General—
‘‘(A) the Board and each Federal reserve
bank shall maintain such documents and infor-
mation as the Comptroller General determines
may be useful for purposes of any audit under
paragraph (1) for such reasonable period of
time as the Comptroller General determines to
be appropriate; and
‘‘(B) the Comptroller General shall have
full access to such documents for purposes of
any audit under paragraph (1).
‘‘(3) REPORT.—A report on each audit con-
ducted under paragraph (1) shall be submitted an-
nually to the Congress.’’.
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