I
107TH CONGRESS
1ST SESSION
H. R. 974
To increase the number of interaccount transfers which may be made from
business accounts at depository institutions, to authorize the Board of
Governors of the Federal Reserve System to pay interest on reserves,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 13, 2001
Mrs. KELLY (for herself, Ms. CAPITO, and Mr. CANTOR) introduced the
following bill; which was referred to the Committee on Financial Services
A BILL
To increase the number of interaccount transfers which may
be made from business accounts at depository institu-
tions, to authorize the Board of Governors of the Federal
Reserve System to pay interest on 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 Inter-
est Checking Act of 2001’’.
SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AU-
THORIZED 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) 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 may de-
termine by rule or order), for any purpose, to another ac-
count of the owner in the same institution. Nothing in this
subsection shall be construed to prevent an account of-
fered pursuant to this subsection from being considered
a transaction account (as defined in section 19(b) of the
Federal Reserve Act for purposes of such Act.’’.
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 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)’’.
SEC. 4. INCREASED FEDERAL RESERVE BOARD FLEXI-
BILITY 
IN 
SETTING 
RESERVE 
REQUIRE-
MENTS.
Section 19(b)(2) of the Federal Reserve Act (12
U.S.C. 461(b)(2)) 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. 5. TRANSFER OF FEDERAL RESERVE SURPLUSES.
(a) IN GENERAL.—Section 7(b) of the Federal Re-
serve Act (12 U.S.C. 290) is amended by adding at the
end the following new paragraph:
‘‘(4) ADDITIONAL
TRANSFERS
TO
COVER
IN-
TEREST
PAYMENTS
FOR
FISCAL
YEARS
2001
THROUGH 2005.—
‘‘(A) IN
GENERAL.—In addition to the
amounts required to be transferred from the
surplus funds of the Federal reserve banks pur-
suant 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 deposit in the general fund of the
Treasury, such sums as are necessary to equal
the net cost of section 19(b)(12), as estimated
by the Office of Management and Budget, in
each of the fiscal years 2002 through 2006.
‘‘(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 2002 through
2006, 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 
2002
through 2006, 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 2002 through 2006, 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
be transferred to the Secretary of the Treasury for
deposit in the general fund of the Treasury.’’.
Æ