article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Interest on Business Checking Act of 2001''. SEC. 2. AMENDMENTS RELATING TO DEMAND DEPOSIT ACCOUNTS 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 amended by adding at the end the following: ``Notwithstanding any other provision of this section, a member 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 not more than 24 transfers per month (or such greater number as the Board may determine by rule or order), for any purpose, to a demand deposit account of the owner in the same institution. With respect to an escrow account maintained in connection with a loan, a lender or servicer shall pay interest on such account only if such payments are required by contract between the lender or servicer and the borrower, or a specific statutory provision of the law of the State in which the security property is located requires the lender or servicer to make such payments. Nothing in this subsection shall be construed to prevent an account offered pursuant to this subsection from being considered a transaction account for purposes of this Act.''. (2) Home owners' loan act.--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 following: ``(G) Transfers.-- ``(i) In general.--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 deposit or share, or any account on which interest or dividends are paid, to make not more than 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) of the Federal Reserve Act to be permissible for member banks), for any purpose, to a demand deposit account of the owner in the same institution. ``(ii) Escrow accounts.--With respect to an escrow account maintained in connection with a loan, a lender or servicer shall pay interest on such account only if-- ``(I) such payments are required by contract between the lender or servicer and the borrower; or ``(II) a specific statutory provision of the law of the State in which the security property is located requires the lender or servicer to make such payments. ``(iii) Limitation.--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.''. (3) Federal deposit insurance act.--Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended by adding at the end the following: ``(3) Transfers.-- ``(A) In general.--Notwithstanding any other provision of this subsection, an insured nonmember bank or insured State savings association may permit 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 not more than 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) of the Federal Reserve Act to be permissible for member banks), for any purpose, to a demand deposit account of the owner in the same institution. ``(B) Escrow accounts.--With respect to an escrow account maintained in connection with a loan, a lender or servicer shall pay interest on such account only if-- ``(i) such payments are required by contract between the lender or servicer and the borrower; or ``(ii) a specific statutory provision of the law of the State in which the security property is located requires the lender or servicer to make such payments. ``(C) Limitation.--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 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.--Section 5(b)(1) of the Home Owners' Loan Act (12 U.S.C. 1464(b)(1)) is amended-- (A) in subparagraph (B), by striking ``savings association may not--'' and all that follows through ``(ii) permit any'' and inserting ``savings association may not permit any''; and (B) by striking subparagraph (G). (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].''. (4) Effective date.--The amendments made by this subsection shall take effect at the end of the 2-year period beginning on the date of enactment of this Act. 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: ``(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 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 which are not member banks.''. (b) Technical and Conforming Amendments.-- (1) Section 19(b) of federal reserve act.--Section 19(b)(4) of the Federal Reserve Act (12 U.S.C. 461(b)(4)) is amended-- (A) by striking subparagraph (C); and (B) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively. (2) Section 19(c) of federal reserve act.--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)''. &lt;greek-d&gt;
summary: Interest on Business Checking Act of 2001 - Amends the Federal Reserve Act, the Home Owners' Loan Act, and the Federal Deposit Insurance Act to: (1) provide that a depository institution may permit owners of interest or dividend paying accounts to make up to 24 transfers monthly for any purpose to their other demand deposits in the same institution; and (2) repeal the proscription against the payment of interest on demand deposits.Prescribes conditions for interest payments on escrow accounts.Amends the Federal Reserve Act to require a Federal reserve bank to pay interest at least quarterly on any balance maintained by a depository institution at the reserve bank to meet its reserve requirements.