Small Business Banking Regulatory Relief Act of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Banking Regulatory 
Relief Act of 1999''.

SEC. 2. AMENDMENTS RELATING TO SAVINGS AND DEMAND DEPOSIT ACCOUNTS AT 
              DEPOSITORY INSTITUTIONS.

    (a) Interest-Bearing Transaction Accounts Authorized 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 following:
    ``(b) Interaccount Transfers.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, any depository institution may permit the owner of any 
        deposit or account on which interest or dividends are paid to 
        make up to 24 transfers per month, for any purpose, to another 
        account of the owner in the same institution.
            ``(2) Rule of construction.--No provision of this 
        subsection shall be construed as preventing an account offered 
        pursuant to this subsection from being considered a transaction 
        account (as defined in section 19(b) of the Federal Reserve Act 
        (12 U.S.C. 461(b)) for purposes of such Act.''.
    (b) Now Accounts Authorized for All Businesses After September 30, 
2001.--
            (1) In general.--Effective on the date provided in 
        paragraph (3), section 2 of Public Law 93-100 (12 U.S.C. 1832) 
        (as amended by subsection (a) of this section) is amended to 
        read as follows:

``SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFERABLE INSTRUMENTS FOR 
              TRANSFERS TO THIRD PARTIES.

    ``(a) In General.--Notwithstanding any other provision of law, any 
depository institution (as defined in section 3 of the Federal Deposit 
Insurance Act) may permit the owner of any deposit or account to make 
withdrawals from such deposit or account by negotiable or transferable 
instruments for the purpose of making payments to third parties.
    ``(b) Escrow Accounts.--With respect to an escrow account, a lender 
or servicer shall pay interest on such account only if such payments 
are required by--
            ``(1) a contract between the lender or servicer and the 
        borrower; or
            ``(2) a specific statutory provision of the law in effect 
        in the State in which the property which is secured by the loan 
        is located requires the lender or servicer to make such 
        payments.''.
            (2) Repeal of prohibition on payment of interest on demand 
        deposits.--
                    (A) Federal reserve act.--Section 19(i) of the 
                Federal Reserve Act (12 U.S.C. 371a(i)) is amended to 
                read as follows:
    ``(i) [Repealed]''.
                    (B) Home owners' loan act.--The 1st 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''.
                    (C) 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]''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on October 1, 2001.

SEC. 3. 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 to meet the reserve requirements of this 
                subsection applicable with respect to such depository 
                institution shall receive earnings to be paid by the 
                Federal reserve bank at least once each calendar 
                quarter at a rate not to exceed the rate earned on the 
                securities portfolio of the Federal Reserve System 
                during the preceding quarter.
                    ``(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 which are not 
                        member banks.''.
    (b) Technical and Conforming Amendments.--
            (1) Section 19(b)(4) of the Federal Reserve Act (12 U.S.C. 
        461(b)(4)) is amended by striking subparagraph (C).
            (2) Section 19(c)(1)(A) of the Federal Reserve Act (12 
        U.S.C. 461(c)(1)(A)) is amended by striking ``subsection 
        (b)(4)(C)'' and inserting ``subsection (b)''.

Summary: Small Business Banking Regulatory Relief Act of 1999 - Amends Federal banking law with respect to a depository institution's authority to permit the holder of any interest-earning or dividend-earning deposit or account (negotiable order of withdrawal or NOW account) to make withdrawals from such account by negotiable or transferable instrument in order to make payments to third parties. Allows the owner of such an account to make up to 24 transfers per month, for any purpose, to another account in the same institution. 
Allows any depository institution to permit the owner of any deposit or account (currently limited to individuals, nonprofit organizations, and Federal, State, and local governments) to make withdrawals for making payments to third parties.  Provides conditions under which a lender or servicer shall pay interest on an escrow account. 
Repeals Federal provisions which prohibit the payment of interest on demand deposits. 
Amends the Federal Reserve Act to provide for the payment of earnings by Federal reserve banks on balances maintained at such banks by or on behalf of a depository institution in order to meet Federal reserve requirements.  Authorizes the Board of Governors of the Federal Reserve System to prescribe regulations with regard to such payments and their distribution and crediting.