102
any affiliate of any bank, bank holding company, or 
foreign bank, to the extent such tax or tax method 
is otherwise permissible by or under the Constitution 
of the United States or other Federal law. 
‘‘(7) DEFINITIONS.—For purpose of this sec-
tion, the following definition shall apply: 
‘‘(A) The terms ‘host State’, ‘home State’, 
and ‘out-of-State bank’ have the same meanings 
as in section 44(g). 
‘‘(B) The term ‘State supervisory fees’ 
means assessments, examination fees, branch 
fees, license fees, and all other fees that are lev-
ied or charged by a State bank supervisor di-
rectly upon an insured State bank or upon 
branches of an insured State bank. 
‘‘(C) Solely for purposes of subparagraph 
(2)(B) of this subsection (h), an insured State 
bank has been determined to be in ‘troubled 
condition’ if the bank—
‘‘(i) has a composite rating, as deter-
mined in its most recent report of exam-
ination, of 4 or 5 under the Uniform Fi-
nancial 
Institutions 
Ratings 
System 
(UFIRS); or
103
‘‘(ii) is subject to a proceeding initi-
ated by the Corporation for termination or 
suspension of deposit insurance; or 
‘‘(iii) is subject to a proceeding initi-
ated by the State bank supervisor of the 
bank’s home State to vacate, revoke, or 
terminate the charter of the bank, or to 
liquidate the bank, or to appoint a receiver 
for the bank. 
‘‘(D) For the purposes of paragraph 
(2)(B), the term ‘final determination’ means 
the transmittal of a Report of Examination to 
the bank or transmittal of official notice of pro-
ceedings to the bank.’’.
TITLE VII—BUSINESS CHECKING 
FREEDOM 
SEC. 701. SHORT TITLE. 
This title may be cited as the ‘‘Business Checking 
Freedom Act of 2004’’. 
SEC. 702. INTEREST-BEARING TRANSACTION ACCOUNTS 
AUTHORIZED FOR ALL BUSINESSES. 
(a) 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
104
(2) by inserting after subsection (a) the fol-
lowing: 
‘‘(b) Notwithstanding any other provision of law, any 
depository institution may permit the owner of any deposit 
or account which is a deposit or account on which interest 
or dividends are paid and is not a deposit or account de-
scribed in subsection (a)(2) to make up to 24 transfers 
per month (or such greater number as the Board of Gov-
ernors of the Federal Reserve System may determine by 
rule or order), for any purpose, to another account of the 
owner in the same institution. An account offered pursu-
ant to this subsection shall be considered a transaction 
account for purposes of section 19 of the Federal Reserve 
Act unless the Board of Governors of the Federal Reserve 
System determines otherwise.’’. 
(b) Effective at the end of the 2-year period begin-
ning on the date of the enactment of this Act, section 2 
of Public Law 93–100 (12 U.S.C. 1832) is amended—
(1) in subsection (a)(1), by striking ‘‘but sub-
ject to paragraph (2)’’; 
(2) by striking paragraph (2) of subsection (a) 
and inserting the following new paragraph: 
‘‘(2) No provision of this section may be con-
strued as conferring the authority to offer demand
105
deposit accounts to any institution that is prohibited 
by law from offering demand deposit accounts.’’; and 
(3) in subsection (b) (as added by subsection 
(a) of this section) by striking ‘‘and is not a deposit 
or account described in subsection (a)(2)’’. 
SEC. 703. INTEREST-BEARING TRANSACTION ACCOUNTS 
AUTHORIZED. 
(a) REPEAL OF PROHIBITION ON PAYMENT OF IN-
TEREST ON DEMAND DEPOSITS.—
(1) FEDERAL RESERVE ACT.—Section 19(i) of 
the Federal Reserve Act (12 U.S.C. 371a) is amend-
ed to read as follows: 
‘‘(i) [Repealed]’’. 
(2) HOME OWNERS’ LOAN ACT.—The first sen-
tence 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’’. 
(3) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 18(g) of the Federal Deposit Insurance Act (12 
U.S.C. 1828(g)) is amended to read as follows: 
‘‘(g) [Repealed]’’.
106
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect at the end of the 2-year 
period beginning on the date of the enactment of this Act. 
SEC. 704. PAYMENT OF INTEREST ON RESERVES AT FED-
ERAL 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 may receive earnings to 
be paid by the Federal reserve bank at least 
once each calendar quarter at a rate or rates 
not to exceed the general level of short-term in-
terest rates. 
‘‘(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
107
‘‘(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)(A), in a 
Federal reserve bank by any such entity on 
behalf of depository institutions. 
‘‘(C) 
DEPOSITORY
INSTITUTIONS
DE-
FINED.—For purposes of this paragraph, the 
term ‘depository institution’, in addition to the 
institutions described in paragraph (1)(A), in-
cludes any trust company, corporation orga-
nized under section 25A or having an agree-
ment with the Board under section 25, or any 
branch or agency of a foreign bank (as defined 
in section 1(b) of the International Banking Act 
of 1978).’’. 
(b) AUTHORIZATION FOR PASS THROUGH RESERVES 
FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed-
eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by 
striking ‘‘which is not a member bank’’. 
(c) CONSUMER BANKING COSTS ASSESSMENT.—
108
(1) IN
GENERAL.—The Federal Reserve Act 
(12 U.S.C. 221 et seq.) is amended—
(A) by redesignating sections 30 and 31 as 
sections 31 and 32, respectively; and 
(B) by inserting after section 29 the fol-
lowing new section: 
‘‘SEC. 30. SURVEY OF BANK FEES AND SERVICES. 
‘‘(a) ANNUAL SURVEY REQUIRED.—The Board of 
Governors of the Federal Reserve System shall obtain an-
nually a sample, which is representative by type and size 
of the institution (including small institutions) and geo-
graphic location, of the following retail banking services 
and products provided by insured depository institutions 
and insured credit unions (along with related fees and 
minimum balances): 
‘‘(1) Checking and other transaction accounts. 
‘‘(2) Negotiable order of withdrawal and sav-
ings accounts. 
‘‘(3) Automated teller machine transactions. 
‘‘(4) Other electronic transactions. 
‘‘(b) MINIMUM SURVEY REQUIREMENT.—The annual 
survey described in subsection (a) shall meet the following 
minimum requirements:
109
‘‘(1) CHECKING AND OTHER TRANSACTION AC-
COUNTS.—Data on checking and transaction ac-
counts shall include, at a minimum, the following: 
‘‘(A) Monthly and annual fees and min-
imum balances to avoid such fees. 
‘‘(B) Minimum opening balances. 
‘‘(C) Check processing fees. 
‘‘(D) Check printing fees. 
‘‘(E) Balance inquiry fees. 
‘‘(F) Fees imposed for using a teller or 
other institution employee. 
‘‘(G) Stop payment order fees. 
‘‘(H) Nonsufficient fund fees. 
‘‘(I) Overdraft fees. 
‘‘(J) Deposit items returned fees. 
‘‘(K) Availability of no-cost or low-cost ac-
counts for consumers who maintain low bal-
ances. 
‘‘(2) NEGOTIABLE ORDER OF WITHDRAWAL AC-
COUNTS AND SAVINGS ACCOUNTS.—Data on nego-
tiable order of withdrawal accounts and savings ac-
counts shall include, at a minimum, the following: 
‘‘(A) Monthly and annual fees and min-
imum balances to avoid such fees. 
‘‘(B) Minimum opening balances.
110
‘‘(C) Rate at which interest is paid to con-
sumers. 
‘‘(D) Check processing fees for negotiable 
order of withdrawal accounts. 
‘‘(E) Fees imposed for using a teller or 
other institution employee. 
‘‘(F) Availability of no-cost or low-cost ac-
counts for consumers who maintain low bal-
ances. 
‘‘(3) AUTOMATED
TELLER
TRANSACTIONS.—
Data on automated teller machine transactions shall 
include, at a minimum, the following: 
‘‘(A) Monthly and annual fees. 
‘‘(B) Card fees. 
‘‘(C) Fees charged to customers for with-
drawals, deposits, and balance inquiries through 
institution-owned machines. 
‘‘(D) Fees charged to customers for with-
drawals, deposits, and balance inquiries through 
machines owned by others. 
‘‘(E) Fees charged to noncustomers for 
withdrawals, deposits, and balance inquiries 
through institution-owned machines. 
‘‘(F) Point-of-sale transaction fees.
111
‘‘(4) OTHER
ELECTRONIC
TRANSACTIONS.—
Data on other electronic transactions shall include, 
at a minimum, the following: 
‘‘(A) Wire transfer fees. 
‘‘(B) Fees related to payments made over 
the Internet or through other electronic means. 
‘‘(5) OTHER
FEES
AND
CHARGES.—Data on 
any other fees and charges that the Board of Gov-
ernors of the Federal Reserve System determines to 
be appropriate to meet the purposes of this section. 
‘‘(6) FEDERAL RESERVE BOARD AUTHORITY.—
The Board of Governors of the Federal Reserve Sys-
tem may cease the collection of information with re-
gard to any particular fee or charge specified in this 
subsection if the Board makes a determination that, 
on the basis of changing practices in the financial 
services industry, the collection of such information 
is no longer necessary to accomplish the purposes of 
this section. 
‘‘(c) ANNUAL REPORT TO CONGRESS REQUIRED.—
‘‘(1) PREPARATION.—The Board of Governors 
of the Federal Reserve System shall prepare a report 
of the results of each survey conducted pursuant to 
subsections (a) and (b) of this section and section 
136(b)(1) of the Consumer Credit Protection Act.
112
‘‘(2) CONTENTS OF THE REPORT.—In addition 
to the data required to be collected pursuant to sub-
sections (a) and (b), each report prepared pursuant 
to paragraph (1) shall include a description of any 
discernible trend, in the Nation as a whole, in a rep-
resentative sample of the 50 States (selected with 
due regard for regional differences), and in each 
consolidated metropolitan statistical area (as defined 
by the Director of the Office of Management and 
Budget), in the cost and availability of the retail 
banking services, including those described in sub-
sections (a) and (b) (including related fees and min-
imum balances), that delineates differences between 
institutions on the basis of the type of institution 
and the size of the institution, between large and 
small institutions of the same type, and any engage-
ment of the institution in multistate activity. 
‘‘(3) SUBMISSION TO CONGRESS.—The Board 
of Governors of the Federal Reserve System shall 
submit an annual report to the Congress not later 
than June 1, 2005, and not later than June 1 of 
each subsequent year. 
‘‘(d) DEFINITIONS.—For purposes of this section, the 
term ‘insured depository institution’ has the meaning 
given such term in section 3 of the Federal Deposit Insur-
113
ance Act, and the term ‘insured credit union’ has the 
meaning given such term in section 101 of the Federal 
Credit Union Act.’’. 
(2) CONFORMING AMENDMENT.—
(A) IN GENERAL.—Paragraph (1) of sec-
tion 136(b) of the Truth in Lending Act (15 
U.S.C. 1646(b)(1)) is amended to read as fol-
lows: 
‘‘(1) COLLECTION REQUIRED.—The Board shall 
collect, on a semiannual basis, from a broad sample 
of financial institutions which offer credit card serv-
ices, credit card price and availability information 
including—
‘‘(A) the information required to be dis-
closed under section 127(c) of this chapter; 
‘‘(B) the average total amount of finance 
charges paid by consumers; and 
‘‘(C) the following credit card rates and 
fees: 
‘‘(i) Application fees. 
‘‘(ii) Annual percentage rates for cash 
advances and balance transfers. 
‘‘(iii) Maximum annual percentage 
rate that may be charged when an account 
is in default.
114
‘‘(iv) Fees for the use of convenience 
checks. 
‘‘(v) Fees for balance transfers. 
‘‘(vi) Fees for foreign currency con-
versions.’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall take effect on 
January 1, 2004. 
(3) REPEAL OF OTHER REPORT PROVISIONS.—
Section 1002 of Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989 and section 
108 of the Riegle-Neal Interstate Banking and 
Branching Efficiency Act of 1994 are hereby re-
pealed. 
(d) 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 sub-
paragraphs (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)’’.
115
SEC. 705. INCREASED FEDERAL RESERVE BOARD FLEXI-
BILITY 
IN 
SETTING 
RESERVE 
REQUIRE-
MENTS. 
Section 19(b)(2)(A) of the Federal Reserve Act (12 
U.S.C. 461(b)(2)(A)) 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. 706. TRANSFER OF FEDERAL RESERVE SURPLUSES. 
(a) IN GENERAL.—Section 7(b) of the Federal Re-
serve Act (12 U.S.C. 289(b)) is amended by adding at 
the end the following new paragraph: 
‘‘(4) ADDITIONAL
TRANSFERS
TO
COVER
IN-
TEREST
PAYMENTS
FOR
FISCAL
YEARS
2003 
THROUGH 2007.—
‘‘(A) IN
GENERAL.—In addition to the 
amounts required to be transferred from the 
surplus funds of the Federal reserve banks pur-
suant to subsection (a)(3), the Federal reserve 
banks shall transfer from such surplus funds to 
the Board of Governors of the Federal Reserve 
System for transfer to the Secretary of the 
Treasury for deposit in the general fund of the
116
Treasury, such sums as are necessary to equal 
the net cost of section 19(b)(12) in each of the 
fiscal years 2003 through 2007. 
‘‘(B) ALLOCATION BY FEDERAL RESERVE 
BOARD.—Of the total amount required to be 
paid by the Federal reserve banks under sub-
paragraph (A) for fiscal years 2003 through 
2007, the Board of Governors of the Federal 
Reserve System shall determine the amount 
each such bank shall pay in such fiscal year. 
‘‘(C) REPLENISHMENT OF SURPLUS FUND 
PROHIBITED.—During 
fiscal 
years 
2003 
through 2007, no Federal reserve bank may re-
plenish such bank’s surplus fund by the amount 
of any transfer by such bank under subpara-
graph (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 2003 through 2007, any amount in the sur-
plus 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
117
be transferred to the Secretary of the Treasury for 
deposit in the general fund of the Treasury.’’. 
SEC. 707. RULE OF CONSTRUCTION. 
In the case of an escrow account maintained at a de-
pository institution in connection with a real estate trans-
action—
(1) the absorption, by the depository institution, 
of expenses incidental to providing a normal banking 
service with respect to such escrow account; 
(2) the forbearance, by the depository institu-
tion, from charging a fee for providing any such 
banking function; and 
(3) any benefit which may accrue to the holder 
or the beneficiary of such escrow account as a result 
of an action of the depository institution described 
in subparagraph (1) or (2) or similar in nature to 
such action, 
shall not be treated as the payment or receipt of interest 
for purposes of this Act and any provision of Public Law 
93–100, the Federal Reserve Act, the Home Owners’ Loan 
Act, or the Federal Deposit Insurance Act relating to the 
payment of interest on accounts or deposits at depository 
institutions, provided, however, that nothing herein shall 
be construed so as to require a depository institution that 
maintains an escrow account in connection with a real es-
118
tate transaction to pay interest on such escrow account 
or to prohibit such institution from paying interest on 
such escrow account. Nor shall anything herein be con-
strued to preempt the provisions of law of any State deal-
ing with the payment of interest on escrow accounts main-
tained in connection with real estate transactions.
TITLE VIII—CLERICAL AND 
TECHNICAL AMENDMENTS 
SEC. 801. CLERICAL AMENDMENTS TO THE HOME OWNERS’ 
LOAN ACT. 
(a) AMENDMENT TO TABLE OF CONTENTS.—The 
table of contents in section 1 of the Home Owners’ Loan 
Act (12 U.S.C. 1461) is amended by striking the items 
relating to sections 5 and 6 and inserting the following 
new items:
‘‘Sec. 5. Savings associations. 
‘‘Sec. 6. [Repealed.]’’.
(b) CLERICAL AMENDMENTS TO HEADINGS.—
(1) The heading for section 4(a) of the Home 
Owners’ Loan Act (12 U.S.C. 1463(a)) is amended 
by striking ‘‘(a) FEDERAL
SAVINGS
ASSOCIA-
TIONS.—’’ and inserting ‘‘(a) GENERAL RESPON-
SIBILITIES OF THE DIRECTOR.—’’. 
(2) The section heading for section 5 of the 
Home Owners’ Loan Act (12 U.S.C. 1464) is 
amended to read as follows: