(1) by redesignating subsections (b) and (c) as 
subsections (c) and (d), respectively; and 
(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.’’. 
SEC. 3. INTEREST-BEARING TRANSACTION ACCOUNTS AU-
THORIZED. 
(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‘‘(i) [Repealed]’’.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‘‘(g) [Repealed]’’. 
(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. 4. 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 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 
‘‘(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-