I
106TH CONGRESS
1ST SESSION
H. R. 1435
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
APRIL 15, 1999
Mr. METCALF (for himself, Mr. LEACH, and Mr. KANJORSKI) introduced the
following bill; which was referred to the Committee on Banking and Fi-
nancial Services
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 Regulatory Relief Act of 1999’’.
SEC. 2. AMENDMENTS RELATING TO SAVINGS AND DEMAND
DEPOSIT ACCOUNTS AT DEPOSITORY INSTI-
TUTIONS.
(a) 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 fol-
lowing:
‘‘(b) INTERACCOUNT TRANSFERS.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, any depository institution may per-
mit the owner of any deposit or account on which in-
terest or dividends are paid to make up to 24 trans-
fers per month, for any purpose, to another account
of the owner in the same institution.
‘‘(2) RULE OF CONSTRUCTION.—No provision
of this subsection shall be construed as preventing
an account offered pursuant to this subsection from
being considered a transaction account (as defined
in section 19(b) of the Federal Reserve Act (12
U.S.C. 461(b)) for purposes of such Act.’’.
(b) NOW ACCOUNTS AUTHORIZED FOR ALL BUSI-
NESSES AFTER SEPTEMBER 30, 2001.—
(1) IN GENERAL.—Effective on the date pro-
vided in paragraph (3), section 2 of Public Law 93–
100 (12 U.S.C. 1832) (as amended by subsection
(a) of this section) is amended to read as follows:
‘‘SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFER-
ABLE INSTRUMENTS FOR TRANSFERS TO
THIRD PARTIES.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, any depository institution (as defined in sec-
tion 3 of the Federal Deposit Insurance Act) may permit
the owner of any deposit 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) ESCROW ACCOUNTS.—With respect to an escrow
account, a lender or servicer shall pay interest on such
account only if such payments are required by—
‘‘(1) a contract between the lender or servicer
and the borrower; or
‘‘(2) a specific statutory provision of the law in
effect in the State in which the property which is se-
cured by the loan is located requires the lender or
servicer to make such payments.’’.
(2) REPEAL OF PROHIBITION ON PAYMENT OF
INTEREST ON DEMAND DEPOSITS.—
(A) FEDERAL
RESERVE
ACT.—Section
19(i) of the Federal Reserve Act (12 U.S.C.
371a(i)) is amended to read as follows:
‘‘(i) [Repealed]’’.
(B) 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’’.
(C) 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]’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on October 1,
2001.
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 AMENDMENTS.—
(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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