article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Business Checking Freedom Act of 2002''. 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Federal reserve act.--Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a) is amended to read as follows: ``(i) [Repealed]''.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act.--Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to read as follows: ``(g) [Repealed]''.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) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and (2) 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 of Governors of the Federal Reserve System may determine by rule or order), for any purpose, to another account of the owner in the same institution. An account offered pursuant to this subsection shall be considered a transaction account for purposes of section 19 of the Federal Reserve Act unless the Board of Governors of the Federal Reserve System determines otherwise.''. 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)(A), in a Federal reserve bank by any such entity on behalf of depository institutions. ``(C) Depository institutions defined.--For purposes of this paragraph, the term `depository institution', in addition to the institutions described in paragraph (1)(A), includes any trust company, corporation organized under section 25A or having an agreement with the Board under section 25, or any branch or agency of a foreign bank (as defined in section 1(b) of the International Banking Act of 1978).''. (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) Consumer Banking Costs Assessment.-- (1) In general.--Section 1002 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note) is amended to read as follows: ``SEC. 1002. SURVEY OF BANK FEES AND SERVICES. ``(a) Annual Survey Required.--The Board of Governors of the Federal Reserve System shall obtain annually a sample, which is representative by type and size of the institution (including small institutions) 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): ``(1) Checking and other transaction accounts. ``(2) Negotiable order of withdrawal and savings accounts. ``(3) Automated teller machine transactions. ``(4) Other electronic transactions. ``(b) Minimum Survey Requirement.--The annual survey described in subsection (a) shall meet the following minimum requirements: ``(1) Checking and other transaction accounts.--Data on checking and transaction accounts shall include, at a minimum, the following: ``(A) Monthly and annual fees and minimum balances to avoid such fees. ``(B) Minimum opening balances. ``(C) Check processing fees. ``(D) Check printing fees. ``(E) Balance inquiry fees. ``(F) Fees imposed for using a teller or other institution employee. ``(G) Stop payment order fees. ``(H) Nonsufficient fund fees. ``(I) Overdraft fees. ``(J) Deposit items returned fees. ``(K) Availability of no-cost or low-cost accounts for consumers who maintain low balances. ``(2) 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: ``(A) Monthly and annual fees and minimum balances to avoid such fees. ``(B) Minimum opening balances. ``(C) Rate at which interest is paid to consumers. ``(D) Check processing fees for negotiable order of withdrawal accounts. ``(E) Fees imposed for using a teller or other institution employee. ``(F) Availability of no-cost or low-cost accounts for consumers who maintain low balances. ``(3) Automated teller transactions.--Data on automated teller machine transactions shall include, at a minimum, the following: ``(A) Monthly and annual fees. ``(B) Card fees. ``(C) Fees charged to customers for withdrawals, deposits, and balance inquiries through institution- owned machines. ``(D) Fees charged to customers for withdrawals, deposits, and balance inquiries through machines owned by others. ``(E) Fees charged to noncustomers for withdrawals, deposits, and balance inquiries through institution- owned machines. ``(F) Point-of-sale transaction fees. ``(4) Other electronic transactions.--Data on other electronic transactions shall include, at a minimum, the following: ``(A) Wire transfer fees. ``(B) Fees related to payments made over the Internet or through other electronic means. ``(5) Other fees and charges.--Data on any other fees and charges that the Board of Governors of the Federal Reserve System determines to be appropriate to meet the purposes of this section. ``(6) Federal reserve board authority.--The Board of Governors of the Federal Reserve System may cease the collection of information with regard to any particular fee or charge specified in this subsection if the Board makes a determination that, on the basis of changing practices in the financial services industry, the collection of such information is no longer necessary to accomplish the purposes of this section. ``(c) Annual Report to Congress Required.-- ``(1) Preparation.--The Board of Governors of the Federal Reserve System shall prepare a report of the results of each survey conducted pursuant to subsections (a) and (b) of this section and section 136(b)(1) of the Consumer Credit Protection Act. ``(2) Contents of the report.--In addition to the data required to be collected pursuant to subsections (a) and (b), each report prepared pursuant to paragraph (1) shall include a description of any discernible trend, in the Nation as a whole, in a representative sample of the 50 States (selected with due regard for regional differences), and in each consolidated 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 subsections (a) and (b) (including related fees and minimum balances), that delineates differences between institutions on the basis of the type of institution and the size of the institution, between large and small institutions of the same type, and any engagement of the institution in multistate activity. ``(3) Submission to congress.--The Board of Governors of the Federal Reserve System shall submit an annual report to the Congress not later than June 1, 2004, and not later than June 1 of each subsequent year. ``(4) Transition provision.--Notwithstanding section 4(c)(3) of the Business Checking Freedom Act of 2002, the Board of Governors of the Federal Reserve System shall, on an interim basis, continue to comply with the requirements for the bank fee survey under the amendment made to this section by section 108 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 for reports submitted to the Congress under this section not later than June 1, 2003, except that the Board shall incorporate within any such report, to the extent possible, any additional information on any credit card fee or charge that is available to the Board even though such information is not required by such amendment. ``(d) Definitions.--For purposes of this section, the term ``insured depository institution'' has the meaning given such term in section 3 of the Federal Deposit Insurance Act, and the term ``insured credit union'' has the meaning given such term in section 101 of the Federal Credit Union Act.''. (2) Amendment to the truth in lending act.-- (A) In general.--Paragraph (1) of section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)(1)) is amended to read as follows: ``(1) Collection required.--The Board shall collect, on a semiannual basis, from a broad sample of financial institutions which offer credit card services, credit card price and availability information including-- ``(A) the information required to be disclosed under section 127(c) of this chapter; ``(B) the average total amount of finance charges paid by consumers; and ``(C) the following credit card rates and fees: ``(i) Application fees. ``(ii) Annual percentage rates for cash advances and balance transfers. ``(iii) Maximum annual percentage rate that may be charged when an account is in default. ``(iv) Fees for the use of convenience checks. ``(v) Fees for balance transfers. ``(vi) Fees for foreign currency conversions.''. (B) Effective date.--The amendment made by subparagraph (A) shall take effect on January 1, 2003. (3) Repeal of sunset provision.--Section 108 of the Riegle- Neal Interstate Banking and Branching Efficiency Act of 1994 is hereby repealed. (4) Nonapplicability of other provision of law.--Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995 (31 U.S.C. 1113 note) shall not apply to any report required to be submitted under section 1002(b) of Financial Institutions Reform, Recovery, and Enforcement Act of 1989. (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) 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. 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 service 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 subparagraph (1) or (2) or similar in nature to such action, shall not be treated as the payment or receipt of interest for purposes of this Act and 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 9, 2002. Attest: JEFF TRANDAHL, Clerk.
summary: Business Checking Freedom Act of 2002 - Amends the Federal Reserve Act, the Home Owners' Loan Act, and the Federal Deposit Insurance Act to repeal the prohibition against the payment of interest on demand deposits. Makes such repeal effective two years from the date of enactment.(Sec. 3) Authorizes interest-bearing transaction accounts for businesses, permitting up to 24 transfers per month (or any greater number the Federal Reserve Board (Board) may determine) to another account of the owner in the same institution.(Sec. 4) Authorizes the payment of interest by a Federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution.Revises the requirements for the annual survey of bank fees and services by the Board to specify the inclusion of: (1) checking and other transaction accounts; (2) negotiable order of withdrawal and savings accounts; (3) automated teller machine transactions; and (4) other electronic transactions. Establishes minimum survey requirements for each such account or transaction area. Requires such survey to address minimum balance requirements as well as fees.Amends the Truth in Lending Act (and Consumer Credit Protection Act) to revise the requirements for the semiannual survey of credit card price and availability information to specify the inclusion of certain information, including finance charges, annual percentage rates, and various fees.Requires the Board to report annually to Congress on the results of both surveys.Amends the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 to repeal the termination date for and so continue the annual survey by the Board of certain retail banking services (and associated fees) provided by insured depository institutions.(Sec. 5) Amends the Federal Reserve Act to revise the ratio of reserves a depository institution must maintain against its transaction accounts, permitting a ratio of zero.(Sec. 6) Directs the Federal reserve banks in FY 2002 through 2006 to transfer to the Board for transfer to the Secretary of the Treasury, for deposit in the general fund, additional surplus funds equal to the net cost of their interest payments to depository institutions.(Sec. 7) Provides a rule of construction for escrow accounts maintained at a depository institution in connection with a real estate transaction. Declares that the institution's absorption of expenses or forbearance in charging a fee or other benefit should not be treated as the payment or receipt of interest.