To repeal the prohibition on the payment of interest 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 Federal Reserve System to pay interest on reserves, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Interest Checking Act 
of 2001''.

SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.

    (a) Repeal of Prohibition on Payment of Interest on Demand 
Deposits.--
            (1) Federal reserve act.--Section 19(i) of the Federal 
        Reserve Act (12 U.S.C. 371a) is amended to read as follows:
    ``(i) [Repealed]''.
            (2) Home owners' loan act.--The first sentence 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.--Section 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    ``(g) [Repealed]''.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 AUTHORIZED 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) limitation.--Paragraph 
        (2) shall not apply to any depository institution which is 
        prohibited by the applicable law of its chartering State from 
        offering demand deposits and either--
                    ``(A) does not engage in any lending activities; 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 assets 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 following:
    ``(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 described in subsection (a)(2) to make up to 24 
transfers per month (or such greater number as the Board may determine 
by rule or order), for any purpose, to another 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 such Act).''.

SEC. 4. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE BANKS.

    (a) In General.--Section 19(b) of the Federal Reserve 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 payments and 
                distribution.--The Board may prescribe regulations 
                concerning--
                            ``(i) the payment of earnings in accordance 
                        with this paragraph;
                            ``(ii) the distribution of such earnings to 
                        the depository institutions which maintain 
                        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 
                        accordance 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 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 representative by type and size of 
        the institution and geographic location, of the following 
        retail banking services and products provided by insured 
        depository institutions and insured credit unions (along with 
        related fees and minimum balances):
                    ``(A) Checking and other transaction accounts.
                    ``(B) Negotiable order of withdrawal and savings 
                accounts.
                    ``(C) Automated teller machine transactions.
                    ``(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 following:
                            ``(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 withdrawal accounts and 
                savings accounts.--Data on negotiable order of 
                withdrawal accounts 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 negotiable 
                        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 
                        negotiable order of withdrawal accounts.
                            ``(ix) Nonsufficient fund fees for 
                        negotiable 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 transactions.--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 
                        institution-owned machines.
                            ``(iv) Fees charged to customers for 
                        withdrawals, deposits, transfers between 
                        accounts, balance inquiries through machines 
                        owned by others.
                            ``(v) Fees charged to noncustomers for 
                        withdrawals, deposits, transfers between 
                        accounts, balance inquiries through 
                        institution-owned machines.
                            ``(vi) Point-of-sale transaction fees.
                            ``(vii) Surcharges.
                    ``(D) Other electronic transactions.--Data on other 
                electronic transactions shall include, at a minimum, 
                the following:
                            ``(i) Wire transfer fees.
                            ``(ii) Fees related to payments made over 
                        the Internet or through other electronic 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 account is 
                        not in default.
                            ``(iv) Rates of interest charged for 
                        purchases and cash advances, when an account 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 purposes of this section.
            ``(3) Annual Report to Congress Required.--
                    ``(A) Preparation.--The Board shall prepare a 
                report of the results of each survey conducted pursuant 
                to paragraph (1) and (2).
                    ``(B) Contents of the report.--In addition to the 
                data required to be collected pursuant 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 defined by the Director of the Office of 
                Management 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 delineates differences between 
                institutions on the basis of the type of institution, 
                the size of the institution and any engagement of the 
                institution 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 subsection, the 
        terms `insured depository institution' and `insured credit 
        union' mean any depository institution (as defined in 
        subsection (b)(1)(A)) the deposits or shares in which are 
        insured under the Federal 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 subparagraphs (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 FLEXIBILITY IN SETTING RESERVE 
              REQUIREMENTS.

    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 Reserve Act (12 U.S.C. 
289(b)) is amended by adding at the end the following new paragraph:
            ``(4) Additional transfers to cover interest 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 pursuant 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 subparagraph (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 replenish such bank's surplus fund by 
                the amount of any transfer by such bank under 
                subparagraph (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 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 
        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 presumption 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 institution, 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 Federal 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:

                                                 JEFF TRANDAHL,

                                                                 Clerk.

Summary: Small Business Interest Checking Act of 2001- Amends the Federal Reserve Act, the Home Owners' Loan Act, and the Federal Deposit Insurance Act to repeal the proscription against payment of interest on demand deposits.Authorizes certain depository institutions prohibited by State law from offering demand deposits to offer all owners of a interest- or dividend-paying deposit or account to make withdrawals by negotiable or transferable instruments for the purpose of making payments to third parties. Requires that such an institution either: (1) not engage in lending activities; or (2) not be an affiliate of a company or companies whose aggregate assets represent over ten percent of the institution's total assets.Amends Federal banking law governing interaccount transfers to provide that a depository institution may permit owners of certain interest- or dividend-paying accounts to make up to 24 transfers monthly for any purpose to their other accounts in the same institution.Amends the Federal Reserve Act to authorize a Federal reserve bank to pay interest at least quarterly (at a rate not to exceed the general level of short term interest rates) to a depository institution on any balance it maintains at the reserve bank.Repeals a specified restriction in order to authorize pass-through reserves for member banks (as well as non-member banks).Instructs the Board of Governors of the Federal Reserve System to obtain annually a prescribed survey of designated retail bank fees and services (including electronic and credit card fees), and report the results annually to Congress.Reformulates the mandatory depository institution reserve ratio to: (1) one that is not greater than three percent, and may be zero, (currently, a flat ratio of three percent) for transaction accounts of $25 million or less; and (2) reduce from eight percent to zero the minimum ratio for transaction accounts exceeding $25 million. (Thus authorizes zero reserve requirements for such accounts.)Requires the Federal Reserve banks to transfer certain surplus funds for deposit into the general fund of the Treasury equal to the estimated net cost of making the quarterly payments of interest mandated by this Act for FY 2002 through 2006.Prohibits such banks from replenishing surplus funds by the amount of any such transfers during that time period.