IB
Union Calendar No. 580
106TH CONGRESS
2D SESSION
H. R. 4209
[Report No. 106–983]
To amend the Federal Reserve Act to require the payment of interest on
reserves maintained at Federal reserve banks by insured depository insti-
tutions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 6, 2000
Mrs. KELLY (for herself, Mr. MALONEY of Connecticut, and Mr. METCALF)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services
OCTOBER 17, 2000
Additional sponsors: Mr. GONZALEZ, Mr. HILL of Montana, Mr. FORBES, Mr.
WATT of North Carolina, and Mr. SMITH of New Jersey
OCTOBER 17, 2000
Reported with amendments, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
A BILL
To amend the Federal Reserve Act to require the payment
of interest on reserves maintained at Federal reserve
banks by insured depository institutions, 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 ‘‘Bank Reserves Mod-
ernization Act of 2000’’.
SEC. 2. 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)(B), in a
Federal reserve bank by any such entity on
behalf of depository institutions.’’.
(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) 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)’’.
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Bank Reserves Mod-
ernization Act of 2000’’.
SEC. 2. 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 interest
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 be-
half 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.’’.
(b) AUTHORIZATION FOR PASS THROUGH RESERVES
FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Federal
Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by strik-
ing ‘‘which is not a member bank’’.
(c) 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)’’.
SEC. 3. TRANSFER OF FEDERAL RESERVE SURPLUSES.
(a) IN GENERAL.—Section 7(b) of the Federal Reserve
Act (12 U.S.C. 290) is amended by adding at the end the
following new paragraph:
‘‘(4) ADDITIONAL TRANSFERS TO COVER INTER-
EST
PAYMENTS
FOR
FISCAL
YEARS
2001
THROUGH
2005.—
‘‘(A) IN
GENERAL.—In addition to the
amounts required to be transferred from the sur-
plus funds of the Federal reserve banks pursuant
to paragraph (1), 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 de-
posit in the general fund of the Treasury, such
sums as are necessary to equal the net cost of sec-
tion 19(b)(12), as estimated by the Office of
Management and Budget, in each of the fiscal
years 2001 through 2005.
‘‘(B) ALLOCATION
BY
FEDERAL
RESERVE
BOARD.—Of the total amount required to be paid
by the Federal reserve banks under subparagraph
(A) for fiscal years 2001 through 2005, the
Board of Governors of the Federal Reserve Sys-
tem shall determine the amount each such bank
shall pay in such fiscal year.
‘‘(C) REPLENISHMENT OF SURPLUS FUND
PROHIBITED.—During fiscal years 2001 through
2005, no Federal reserve bank may replenish
such bank’s surplus fund by the amount of any
transfer by such bank under subparagraph (A).’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—Sec-
tion 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 2001 through 2005, any amount in the surplus
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 be
transferred to the Secretary of the Treasury for de-
posit in the general fund of the Treasury.’’.
Amend the title so as to read: ‘‘A bill to amend the
Federal Reserve Act to authorize the payment of interest
on reserves maintained at Federal reserve banks by in-
sured depository institutions, and for other purposes.’’.
Union Calendar No. 580
106TH CONGRESS
2D SESSION
H. R. 4209
[Report No. 106–983]
A BILL
To amend the Federal Reserve Act to require the
payment of interest on reserves maintained at
Federal reserve banks by insured depository in-
stitutions, and for other purposes.
OCTOBER 17, 2000
Reported with amendments, committed to the Committee
of the Whole House on the State of the Union, and or-
dered to be printed