article: 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Federal reserve act.--Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a) is amended to read as follows: ``(i) [Repealed]''.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act.--Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to read as follows: ``(g) [Repealed]''.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.