106TH CONGRESS
2D SESSION
H. R. 4067
AN ACT
To repeal the prohibition on the payment of inter-
est on demand deposits, and for other purposes.
106TH CONGRESS
2D SESSION
H. R. 4067
AN ACT
To repeal the prohibition on the payment of interest on
demand deposits, 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 ‘‘Business Checking
Modernization Act’’.
SEC. 2. AMENDMENTS RELATING TO DEMAND DEPOSIT AC-
COUNTS AT DEPOSITORY INSTITUTIONS.
(a) INTEREST-BEARING TRANSACTION ACCOUNTS
AUTHORIZED.—
(1) FEDERAL RESERVE ACT.—Section 19(i) of
the Federal Reserve Act (12 U.S.C. 371a) is amend-
ed by inserting at the end the following: ‘‘Notwith-
standing any other provision of this section, a mem-
ber bank may permit the owner of any deposit, any
account which is a deposit, or any account on which
interest or dividends are paid to make up to 24
transfers per month (or such greater number as the
Board may determine by rule or order), for any pur-
pose, to a demand deposit account of the owner in
the same institution. Nothing in this subsection shall
be construed to prevent an account offered pursuant
to this subsection from being considered a trans-
action account for purposes of this Act.’’.
(2) HOME OWNERS’ LOAN ACT.—
(A) IN GENERAL.—Section 5(b)(1) of the
Home Owners’ Loan Act (12 U.S.C. 1464
(b)(1)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(G) TRANSFERS.—Notwithstanding any
other provision of this paragraph, a Federal
savings association may permit the owner of
any deposit or share, any account which is a de-
posit or share, or any account on which interest
or dividends are paid to make up to 24 trans-
fers per month (or such greater number as the
Board of Governors of the Federal Reserve Sys-
tem may determine by rule or order under sec-
tion 19(i) to be permissible for member banks),
for any purpose, to a demand deposit account
of the owner in the same institution. Nothing in
this subsection shall be construed to prevent an
account offered pursuant to this subsection
from being considered a transaction account (as
defined in section 19(b) of the Federal Reserve
Act) for purposes of the Federal Reserve Act.’’.
(B) REPEAL.—Effective at the end of the
3-year period beginning on the date of the en-
actment of this Act, section 5(b)(1) of the
Home Owners’ Loan Act (12 U.S.C. 1464
(b)(1)) is amended by striking subparagraph
(G).
(3) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 18(g) of the Federal Deposit Insurance Act (12
U.S.C. 1828(g)) is amended by adding at the end
the following new paragraph:
‘‘(3) TRANSFERS.—Notwithstanding any other
provision of this subsection, an insured nonmember
bank or insured State savings association may per-
mit the owner of any deposit or share, any account
which is a deposit or share, or any account on which
interest or dividends are paid to make up to 24
transfers per month (or such greater number as the
Board of Governors of the Federal Reserve System
may determine by rule or order under section 19(i)
to be permissible for member banks), for any pur-
pose, to a demand deposit account of the owner in
the same institution. Nothing in this subsection shall
be construed to prevent an account offered pursuant
to this subsection from being considered a trans-
action account (as defined in section 19(b) of the
Federal Reserve Act) for purposes of the Federal
Reserve Act.’’.
(b) 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 1st 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]’’.
(c) EFFECTIVE DATE.—The amendments made by
subsection (b) shall take effect at the end of the 3-year
period beginning on the date of the enactment of this Act.
SEC. 3. 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
(2) in clause (ii), by striking ‘‘and not less than
8 per centum’’.
Passed the House of Representatives April 11, 2000.
Attest:
Clerk.