107TH CONGRESS
1ST SESSION
H. R. 974
AN ACT
To repeal the prohibition on the payment of inter-
est on demand deposits, 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 Fed-
eral 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.
(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‘‘(i) [Repealed]’’.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‘‘(g) [Repealed]’’.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. 3. INTEREST-BEARING TRANSACTION ACCOUNTS AU-
THORIZED FOR ALL BUSINESSES.
Section 2 of Public Law 93–100 (12 U.S.C. 1832)
is amended—
(1) in subsection (a), by adding at the end the
following new paragraph:
‘‘(3) EXCEPTION FROM PARAGRAPH (2) LIMITA-
TION.—Paragraph (2) shall not apply to any deposi-
tory institution which is prohibited by the applicable
law of its chartering State from offering demand de-
posits and either—
‘‘(A) does not engage in any lending activi-
ties; or
‘‘(B) is not an affiliate of any company or
companies with assets that, in the aggregate,
represent more than 10 percent of the total as-
sets of the depository institution.’’;
(2) by redesignating subsections (b) and (c) as
subsections (c) and (d), respectively; and
(3) 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. 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)(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) SURVEY OF BANK FEES AND SERVICES.—Section
19 of the Federal Reserve Act (as amended by subsections
(a) and (b) of this section) is amended by adding at the
end the following new subsection:
‘‘(n) SURVEY OF BANK FEES AND SERVICES.—
‘‘(1) ANNUAL SURVEY REQUIRED.—The Board
shall obtain annually a sample, which is representa-
tive by type and size of the institution and geo-
graphic location, of the following retail banking serv-
ices and products provided by insured depository in-
stitutions and insured credit unions (along with re-
lated fees and minimum balances):
‘‘(A) Checking and other transaction ac-
counts.
‘‘(B) Negotiable order of withdrawal and
savings accounts.
‘‘(C) Automated teller machine trans-
actions.
‘‘(D) Other electronic transactions.
‘‘(E) Credit Cards.
‘‘(2) MINIMUM
SURVEY
REQUIREMENT.—The
annual survey described in paragraph (1) shall meet
the following minimum requirements:
‘‘(A) CHECKING AND OTHER TRANSACTION
ACCOUNTS.—Data on checking and transaction
accounts shall include, at a minimum, the fol-
lowing:
‘‘(i) Monthly and annual fees and
minimum balances to avoid such fees.
‘‘(ii) Minimum opening balances.
‘‘(iii) Check processing fees.
‘‘(iv) Check printing fees.
‘‘(v) Balance inquiry fees.
‘‘(vi) Fees imposed for using a teller
or other institution employee.
‘‘(vii) Stop payment order fees.
‘‘(viii) Nonsufficient fund fees.
‘‘(ix) Overdraft fees.
‘‘(x) Deposit items returned fees.
‘‘(xi) Availability of no-cost or low-
cost accounts for consumers who maintain
low balances.
‘‘(B) NEGOTIABLE
ORDER
OF
WITH-
DRAWAL ACCOUNTS AND SAVINGS ACCOUNTS.—
Data on negotiable order of withdrawal ac-
counts and savings accounts shall include, at a
minimum, the following:
‘‘(i) Monthly and annual fees and
minimum balances to avoid such fees.
‘‘(ii) Minimum opening balances.
‘‘(iii) Rate at which interest is paid to
consumers.
‘‘(iv) Check processing fees for nego-
tiable order of withdrawal accounts.
‘‘(v) Check printing fees for negotiable
order of withdrawal accounts.
‘‘(vi) Balance inquiry fees.
‘‘(vii) Fees imposed for using a teller
or other institution employee.
‘‘(viii) Stop payment order fees for ne-
gotiable order of withdrawal accounts.
‘‘(ix) Nonsufficient fund fees for nego-
tiable order of withdrawal accounts.
‘‘(x) Overdraft fees for negotiable
order of withdrawal accounts.
‘‘(xi) Deposit items returned fees.
‘‘(xii) Availability of no-cost or low-
cost accounts for consumers who maintain
low balances.
‘‘(C) 
AUTOMATED
TELLER
TRANS-
ACTIONS.—Data on automated teller machine
transactions shall include, at a minimum, the
following:
‘‘(i) Annual and monthly fees.
‘‘(ii) Card fees.
‘‘(iii) Fees charged to customers for
withdrawals, deposits, transfers between
accounts, balance inquiries through institu-
tion-owned machines.
‘‘(iv) Fees charged to customers for
withdrawals, deposits, transfers between
accounts, balance inquiries through ma-
chines owned by others.
‘‘(v) Fees charged to noncustomers
for withdrawals, deposits, transfers be-
tween accounts, balance inquiries through
institution-owned machines.
‘‘(vi) Point-of-sale transaction fees.
‘‘(vii) Surcharges.
‘‘(D) 
OTHER
ELECTRONIC
TRANS-
ACTIONS.—Data on other electronic trans-
actions shall include, at a minimum, the fol-
lowing:
‘‘(i) Wire transfer fees.
‘‘(ii) Fees related to payments made
over the Internet or through other elec-
tronic means.
‘‘(E) CREDIT CARD CHARGES AND FEES.—
Data related to credit cards shall include, at a
minimum, the following:
‘‘(i) Application fees.
‘‘(ii) Annual and monthly fees.
‘‘(iii) Rates of interest charged for
purchases and cash advances, when an ac-
count is not in default.
‘‘(iv) Rates of interest charged for
purchases and cash advances, when an ac-
count is in default.
‘‘(v) Average annual finance charges
paid by customers.
‘‘(vi) Late payment fees.
‘‘(vii) Cash advance and convenience
check fees.
‘‘(viii) Balance transfer fees.
‘‘(ix) Over-the-credit-limit fees.
‘‘(x) Foreign currency conversion fees.
‘‘(F) OTHER FEES AND CHARGES.—Data
on any other fees and charges that the Board
determines to be appropriate to meet the pur-
poses of this section.
‘‘(3) ANNUAL
REPORT
TO
CONGRESS
RE-
QUIRED.—
‘‘(A) PREPARATION.—The Board shall pre-
pare a report of the results of each survey con-
ducted pursuant to paragraph (1) and (2).
‘‘(B) CONTENTS OF THE REPORT.—In ad-
dition to the data required to be collected pur-
suant to paragraphs (1) and (2), each report
prepared pursuant to subparagraph (A) shall
include a description of any discernible trend, in
the Nation as a whole, in each of the 50 States,
and in each metropolitan statistical area (as de-
fined by the Director of the Office of Manage-
ment and Budget), in the cost and availability
of the retail banking services, including those
described in paragraphs (1) and (2) (including
related fees and minimum balances), that delin-
eates differences between institutions on the
basis of the type of institution, the size of the
institution and any engagement of the institu-
tion in multistate activity.
‘‘(C) SUBMISSION
TO
CONGRESS.—The
Board shall submit an annual report to the
Congress under this paragraph not later than
June 1, 2002, and not later than June 1 of
each subsequent year.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the terms ‘insured depository institution’
and ‘insured credit union’ mean any depository insti-
tution (as defined in subsection (b)(1)(A)) the de-
posits or shares in which are insured under the Fed-
eral Deposit Insurance Act or the Federal Credit
Union Act.’’.
(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
2002
THROUGH 2006.—
‘‘(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), 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.’’.
SEC. 7. RULE OF CONSTRUCTION.
No provision of this Act, or any amendment made
by this Act, shall be construed as creating any presump-
tion or implication that, in the case of an escrow account
maintained at a depository institution in connection with
a real estate transaction—
(1) the absorption, by the depository institution,
of expenses incidental to providing a normal banking
function 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 paragraph (1) or (2),
may be treated as the payment or receipt of interest for
purposes of any provision of Public Law 93–100, the Fed-
eral 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.
Passed the House of Representatives April 3, 2001.
Attest:
Clerk.