(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)’’. 
SEC. 5. 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. 6. 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
2005 
THROUGH 2009.— 
‘‘(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 
Treasury, such sums as are necessary to equal 
the net cost of section 19(b)(12) in each of the 
fiscal years 2005 through 2009. 
‘‘(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 2005 through 
2009, 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 
2005 
through 2009, 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 2005 through 2009, 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.’’. 
SEC. 7. RULES 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