[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 85 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 85

                To provide for basic financial services.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 21 (legislative day, January 5), 1993

Mr. Metzenbaum introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
                To provide for basic financial services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Access Act of 1993''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Basic financial services accounts required.
Sec. 4. Account applications.
Sec. 5. Basic transaction services account requirements.
Sec. 6. Government check cashing services account requirements.
Sec. 7. Information on accounts.
Sec. 8. Special rules for credit unions.
Sec. 9. Special rules for certain depository institutions.
Sec. 10. Prevention of fraud losses.
Sec. 11. Administrative enforcement.
Sec. 12. Civil liability.
Sec. 13. Study and report on incidence of fraud in connection with 
                            government check cashing.
Sec. 14. Study and report on the staggering of Federal recurring 
                            payments.
Sec. 15. Study and report on utilizing the united States postal service 
                            as a supplemental provider of government 
                            check cashing services.
Sec. 16. Study and report on direct deposit program for Federal 
                            recurring payments.
Sec. 17. Effective date.

SEC. 2. DEFINITIONS.

    For the purposes of this Act, the following definitions shall 
apply:
            (1) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same meaning as 
        in section 3 of the Federal Deposit Insurance Act.
            (2) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (3) Depository institution.--The term ``depository 
        institution'' means any federally insured depository 
        institution described in clauses (i) through (vi) of section 
        19(b)(1)(A) of the Federal Reserve Act.
            (4) Government check.--
                    (A) In general.--The term ``government check'' 
                means any check that is issued by--
                            (i) the United States or any agency of the 
                        United States;
                            (ii) any State or any agency of any State, 
                        and that is presented for cashing purposes 
                        within the State in which the check was issued; 
                        or
                            (iii) any unit of local government or any 
                        agency of any unit of local government, 
                        including local government public assistance 
                        payments, and that is presented for cashing 
                        purposes within the unit of local government in 
                        which the check was issued.
                    (B) Exceptions.--The term ``government check'' does 
                not include--
                            (i) State-issued payment warrants; or
                            (ii) checks issued by local government 
                        special purpose districts or units.
            (5) Government check cashing relationship.--The term 
        ``government check cashing relationship'' means an account 
        relationship between an individual and a depository institution 
        under which a government check cashing services account is 
        provided pursuant to section 6.
            (6) State.--The term ``State'' has the same meaning as in 
        section 3(a) of the Federal Deposit Insurance Act.
            (7) Transaction account.--The term ``transaction account'' 
        has the same meaning as in section 19(b)(1)(C) of the Federal 
        Reserve Act.

SEC. 3. BASIC FINANCIAL SERVICES ACCOUNTS REQUIRED.

    (a) In General.--Each depository institution shall offer a basic 
financial services account which, at the election of the account 
holder, may be used to obtain--
            (1) basic transaction account services; or
            (2) government check cashing account services.
    (b) Requirements for Basic Financial Services Accounts.--A basic 
financial services account shall meet the requirements of this Act. A 
basic financial services account does not meet the requirements of this 
Act if it--
            (1) requires the holder of such account to maintain any 
        other relationship with the depository institution, except as 
        provided in section 8;
            (2) allows a depository institution to discriminate against 
        low-income individuals on the basis of race, color, national 
        origin, sex, age, marital status, receipt of public assistance, 
        source of income, exercise of any rights under consumer 
        protection statutes, employment status, or access to credit in 
        order to use such basic financial services account; or
            (3) requires the account holder exclusively to use direct 
        deposit services, automated teller machines, or other nonteller 
        services for such basic financial services account.
    (c) Exemption for Certain Individuals.--A depository institution is 
not required to provide a basic financial services account to any 
individual who--
            (1) has a deposit account relationship at the depository 
        institution or any other depository institution; or
            (2) has a government check cashing relationship at the 
        depository institution or any other depository institution.
    (d) Exemption From Basic Transaction Services Requirements.--Any 
depository institution that offers basic transaction services on the 
effective date of this Act that are, from an account holder's 
perspective, comparable to or more favorable than those services 
prescribed in section 5, shall be exempt from the provisions of section 
5 for as long as the institution continues to offer comparable or more 
favorable basic transaction services.
    (e) Exemption From Check Cashing Services Requirements.--Any 
depository institution that offers government check cashing services on 
the effective date of this Act that, from an account holder's 
perspective, are comparable to or more favorable than those services 
prescribed in section 6, shall be exempt from the provisions of section 
6 for as long as the institution continues to offer comparable or more 
favorable government check cashing services.

SEC. 4. ACCOUNT APPLICATIONS.

    (a) In General.--The Board shall develop a model application form 
for the use of depository institutions in offering a basic financial 
services account.
    (b) Minimum Requirements.--The application form developed by the 
Board, or a comparable form developed by a depository institution in 
lieu thereof, shall--
            (1) be available at all deposit taking offices of the 
        depository institution--
                    (A) at which new accounts may be opened; and
                    (B) that are staffed by individuals employed by the 
                depository institution; and
            (2) contain the name, address, date of birth, handwritten 
        signature, and the taxpayer identification number or other 
        identification number of the applicant, as well as other 
        information the Board reasonably determines to be necessary to 
        the provision of basic transaction account services and 
        government check cashing account services pursuant to this 
        section.
    (c) Identification of Applicant.--At the time of application for a 
basic financial services account, an applicant may be required to 
present 2 forms of identification, 1 of which includes the signature of 
the applicant and 1 of which either includes a photograph or is the 
birth certificate of the applicant.
    (d) Other Services.--At the time of application for a basic 
financial services account, an applicant may be required by the 
depository institution to sign a document in which the applicant states 
whether he or she has, or has applied for, any other basic transaction 
services or government check cashing services.
    (e) Copy Provided.--The depository institution shall provide to the 
applicant a copy of the completed application form demonstrating the 
fact that the application has been received and filed with the 
depository institution not later than 15 calendar days after filing.
    (f) Rejection for Fraud or Intentional Material 
Misrepresentation.--
            (1) In general.--If, after review in good faith of the 
        application, a depository institution has reason to believe 
        that an applicant has committed or attempted to commit fraud 
        against a depository institution, has made an intentional 
        material misrepresentation in applying for a basic financial 
        services account, has a record of writing checks for 
        insufficient funds, or has had an account closed pursuant to 
        section 5(a)(10), the depository institution may deny a basic 
        financial services account to the applicant.
            (2) Requirements.--A depository institution which denies a 
        basic financial services account to an applicant shall--
                    (A) provide the applicant with timely written 
                notice setting forth the reasons supporting the 
                depository institution's denial of a basic financial 
                services account and the procedures available to the 
                applicant for filing a complaint, as provided in 
                section 11; and
                    (B) maintain records and files with regard to each 
                denial made pursuant to this subsection for a minimum 
                period of 1 year from the date of denial.
            (3) Form.--The Board shall develop a model form for the use 
        of depository institutions in notifying applicants of a denial 
        of a basic financial services account pursuant to this 
        subsection.
    (g) Initial Waiting Period.--The depository institution may impose 
a waiting period of not more than 15 calendar days from the date of 
application before providing an applicant with a basic transaction 
services account or a government check cashing services account.
    (h) Identification Card.--If a depository institution issues an 
identification card to approved applicants, it may assess a reasonable, 
cost-based charge for replacement of a lost or stolen card.

SEC. 5. BASIC TRANSACTION SERVICES ACCOUNT REQUIREMENTS.

    (a) In General.--An account is a basic transaction services account 
for the purpose of section 3 if it is a transaction account that--
            (1) is available to all account holders who maintain an 
        average balance of $750 or more during each monthly period;
            (2) does not require a minimum initial deposit or minimum 
        balance requirement of more than $25;
            (3) does not provide for the imposition of fees other 
        than--
                    (A) a monthly maintenance fee or service charge 
                that does not exceed the real, direct, and demonstrable 
                costs of providing the account (including fraud losses 
                and deposit insurance premiums) plus a modest profit 
                not to exceed 10 percent of such costs;
                    (B) a reasonable, cost-based fee for check 
                printing;
                    (C) a reasonable, cost-based fee for processing 
                checks returned for lack of sufficient funds; and
                    (D) a reasonable, cost-based fee for transactions 
                in excess of the minimum number of allowable 
                transactions described in paragraph (5), if the 
                depository institution permits transactions in excess 
                of the minimum;
            (4) permits checks, share drafts, electronic, or other 
        debit instruments to be drawn on the account for purposes of 
        making payments or other transfers to third parties;
            (5) permits at least 10 withdrawals per month, including 
        withdrawals described in paragraph (4), whether by check, share 
        draft, in person, proprietary automatic teller machines, or 
        other means;
            (6) provides the account holder with--
                    (A) a detailed periodic statement listing all 
                transactions for the period involved; or
                    (B) a passbook in which the depository institution 
                enters all transactions for such account;
            (7) does not require the depository institution to pay 
        interest on deposited funds;
            (8) at the election of the account holder, allows regularly 
        recurring payments to the account holder to be made by a payor 
        directly to the depository institution for direct deposit into 
        the account of the account holder, if the depository 
        institution offers direct deposit services to account holders;
            (9) allows the depository institution--
                    (A) to market direct deposit services aggressively;
                    (B) to offer cost-based discounts to account 
                holders who elect to rely wholly or partially on direct 
                deposit or automatic teller machines in conjunction 
                with the account; and
                    (C) to structure the account so as to require the 
                use of direct deposit or automatic teller machines if--
                            (i) at the time of establishing the 
                        account, the account holder receives a clear 
                        and conspicuous written notice, through a 
                        disclosure form developed by the Board, stating 
                        that the account holder may decline to use 
                        direct deposit or automatic teller machines; 
                        and
                            (ii) the account holder does not decline to 
                        use direct deposit or automatic teller 
                        machines; and
            (10) is subject to closure upon notice to the account 
        holder due to--
                    (A) overdrafts, returned checks, or rejected 
                electronic debits with respect to an account on 3 
                distinct occasions in any 6-month period; or
                    (B) fraudulent activity involving the account of 
                such individual.
    (b) Cost Analysis.--For the purpose of subsection (a)(3)(A), the 
depository institution shall base the monthly maintenance fee or 
service charge on functional cost analysis (actual time and actual net 
processing cost) studies of various types of depository institutions 
performed by the Board. The Board shall perform such studies in each of 
its regions, with, at a minimum, 1 cost study per major population area 
and 1 in a rural area in each region.

SEC. 6. GOVERNMENT CHECK CASHING SERVICES ACCOUNT REQUIREMENTS.

    (a) In General.--An account is a government check cashing services 
account for the purpose of section 3 if it--
            (1) permits the account holder immediately to cash 
        government checks in amounts of as much as $1,500, if--
                    (A) the account holder presents the check and is 
                the person to whom the check has been issued; and
                    (B) the individual has applied to the depository 
                institution for government check cashing services 
                pursuant to section 4;
            (2) does not require the account holder to pay a monthly 
        service charge or maintenance fee for check cashing services;
            (3) does not require the account holder to wait for receipt 
        of funds before cashing a government check or to be subject to 
        the institution's funds availability policy;
            (4) does not require the account holder to pay a fee for 
        the establishment of a check cashing account;
            (5) does not have check cashing fees that exceed the real, 
        direct, and demonstrable costs of providing check cashing 
        account services (including fraud losses) plus a modest profit 
        not to exceed 10 percent of such costs;
            (6) allows the account holder to designate not less than 3 
        offices of the depository institution at which to cash 
        government checks, if such offices--
                    (A) take deposits;
                    (B) open new accounts; and
                    (C) are staffed by individuals employed by such 
                depository institution;
        unless the depository institution has fewer than 3 offices 
        which meet the requirements of subparagraphs (A), (B), and (C); 
        and
            (7) permits the depository institution to require, prior to 
        cashing any government check, the account holder to present--
                    (A) any identification described in section 4(c) or 
                section 4(h); and
                    (B) the account holder's government check cashing 
                services account number.
    (b) Cost Analysis.--For the purpose of subsection (a)(5), the 
depository institution shall base such check cashing fees on functional 
analysis (actual time and actual net processing cost) studies of 
various types of depository institutions performed by the Board. The 
Board shall perform such studies in each of its regions, with, at a 
minimum, 1 cost study per major population area and 1 in a rural area 
in each region.

SEC. 7. INFORMATION ON ACCOUNTS.

    (a) Display.--A depository institution shall conspicuously display 
in its lobby and other public areas of the institution brochures, 
pamphlets, or other written information that inform account holders and 
potential account holders that basic financial services accounts are 
available from the institution.
    (b) Information.--Such brochures, pamphlets, or other written 
information shall--
            (1) clearly explain the material features and limitations 
        of basic transaction and government check cashing services;
            (2) state that further information concerning such services 
        is available from the depository institution upon request; and
            (3) include information concerning an account holder's 
        right to complain regarding noncompliance with this Act.
    (c) Availability.--A depository institution shall provide the 
information described in subsection (b) to any individual upon request.

SEC. 8. SPECIAL RULES FOR CREDIT UNIONS.

    (a) Basic Transaction Services.--Any credit union which, in the 
ordinary course of business, offers share draft accounts to its own 
members shall provide basic transaction services in accordance with 
this Act to any individual who is or becomes a member of such credit 
union if the individual complies with the requirements of this Act.
    (b) Government Check Cashing Services.--Any credit union which, in 
the ordinary course of business, cashes share drafts or government 
checks for its own members shall provide government check cashing 
services pursuant to this Act to any individual who is or becomes a 
member of such credit union if the individual complies with the 
requirements of this Act.

SEC. 9. SPECIAL RULES FOR CERTAIN DEPOSITORY INSTITUTIONS.

    (a) Institutions Which Do Not Offer Transaction Accounts.--A 
depository institution, other than a credit union, which does not, in 
the ordinary course of business, offer transaction accounts to the 
general public, is not required to provide basic transaction services.
    (b) Institutions Which Do Not Cash Checks.--A depository 
institution which does not cash checks in the ordinary course of 
business is not required to provide government check cashing services.

SEC. 10. PREVENTION OF FRAUD LOSSES.

    (a) In General.--The Board may, upon petition by any individual 
depository institution, suspend, by regulation or order, any government 
check cashing services account requirement under this Act if the Board 
determines that the depository institution is experiencing an 
unacceptable level of losses due to check-related fraud in providing 
such account services.
    (b) Suspension of Requirements.--The Board may, by regulation or 
order, suspend any government check cashing services account 
requirement imposed by this Act for any class of checks if the Board 
determines that--
            (1) depository institutions are experiencing an 
        unacceptable level of losses due to check-related fraud with 
        respect to such class of checks; or
            (2) there is reasonable cause to believe that such class of 
        checks is being used in a scheme to defraud.
    (c) Report.--Not later than 10 days after issuing any order or 
prescribing any regulation under subsection (a) or (b), the Board shall 
submit a report to the Committee on Banking, Finance and Urban Affairs 
of the House of Representatives and the Committee on Banking, Housing, 
and Urban Affairs of the Senate, explaining the reason for the order or 
regulation and the evidence considered in making the determination to 
issue an order or prescribe a regulation.
    (d) Exemptions.--This Act does not apply with respect to any 
government check presented for cashing to a depository institution if 
the depository institution has reason to believe that--
            (1) such check is fraudulent, is being fraudulently 
        presented, or has been altered or forged;
            (2) the individual presenting the check is misrepresenting 
        or has misrepresented his or her identity;
            (3) any form of identification that is presented in 
        connection with cashing such check has been altered or forged; 
        or
            (4) the check will not be honored by the check-issuing 
        governmental authority.
    (e) Reasonable Belief.--For purposes of subsection (d), a 
reasonable belief requires the existence of facts which would give rise 
to a well-grounded belief in the mind of a reasonable person.

SEC. 11. ADMINISTRATIVE ENFORCEMENT.

    (a) In General.--Compliance with the requirements imposed under 
this Act shall be enforced under--
            (1) section 8 of the Federal Deposit Insurance Act--
                    (A) by the Comptroller of the Currency with respect 
                to national banks, and Federal branches and Federal 
                agencies of foreign banks;
                    (B) by the Board with respect to member banks of 
                the Federal Reserve System (other than national banks), 
                and offices, branches, and agencies of foreign banks 
                located in the United States (other than Federal 
                branches, Federal agencies, and insured State branches 
                of foreign banks);
                    (C) by the Board of Directors of the Federal 
                Deposit Insurance Corporation with respect to banks the 
                deposits of which are insured by the Federal Deposit 
                Insurance Corporation (other than banks described in 
                subparagraph (A) and members of the Federal Reserve 
                System) and insured State branches of foreign banks; 
                and
                    (D) by the Director of the Office of Thrift 
                Supervision with respect to Federal savings 
                associations and Federal savings banks; and
            (2) section 206 of the Federal Credit Union Act, by the 
        National Credit Union Administration Board, with respect to any 
        insured credit union.
    (b) Definition.--The terms used in paragraph subsection (a)(1) that 
are not defined in this Act or otherwise defined in section 3(s) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International Banking Act 
of 1978 (12 U.S.C. 3101).
    (c) Additional Enforcement Powers.--
            (1) Violation of this act treated as violation of other 
        acts.--For purposes of the exercise by the appropriate Federal 
        banking agency of any such agency's powers under any Act 
        referred to in subsection (a), a violation of a requirement 
        imposed under this Act shall be deemed to be a violation of a 
        requirement imposed under that Act.
            (2) Enforcement authority under other acts.--In addition to 
        the appropriate Federal banking agency's powers under any 
        provision of law referred to in subsection (a), each such 
        agency may exercise, for purposes of enforcing this Act, any 
        other authority conferred on such agency by any other law.
    (d) Fining Authority.--No administrative monetary penalty shall be 
imposed pursuant to this Act.
    (e) Complaints by Individuals.--
            (1) In general.--The Board shall develop a complaint form 
        for individuals to use to report possible violations of this 
        Act. Each appropriate Federal banking agency that receives a 
        complaint shall conduct an investigation as such agency deems 
        necessary. If such complaint is verified by an investigation, 
        the agency shall carry out proper enforcement actions according 
        to the authority conferred by this Act. The agency shall 
        provide the results of such investigation and any enforcement 
        actions in writing to the complainant and the depository 
        institution that was investigated.
            (2) Time limit on filing of certain complaints.--An agency 
        shall not consider any complaint that alleges the denial of an 
        application for a basic financial services account in violation 
        of this Act, if the complaint is filed more than 1 year after 
        the institution's denial of the application.

SEC. 12. CIVIL LIABILITY.

    This Act does not create or imply any private cause of action for 
damages, including individual or class action causes of action.

SEC. 13. STUDY AND REPORT ON INCIDENCE OF FRAUD IN CONNECTION WITH 
              GOVERNMENT CHECK CASHING.

    (a) Study Required.--After the end of the 1-year period beginning 
on the effective date of this Act, the Board shall conduct a study of 
the check cashing services provided pursuant to this Act to determine 
whether, in any case, losses due to fraud in connection with providing 
such services are causing the costs incurred by various types of 
depository institutions to exceed revenues from the service fees 
collected or other income earned in connection with providing such 
services.
    (b) Report Required.--Not later than 6 months after commencing the 
study required by subsection (a), the Board shall submit a report to 
the Congress containing the findings and conclusions of the Board with 
respect to the study, along with such recommendations for legislative 
and administrative action as the Board determines to be appropriate.

SEC. 14. STUDY AND REPORT ON THE STAGGERING OF FEDERAL RECURRING 
              PAYMENTS.

    (a) Study Required.--The Secretary of the Treasury, in consultation 
with affected agencies and the public, shall conduct a study to examine 
the feasibility and desirability of staggering payment of Social 
Security and other Federal recurring government benefit and payroll 
payments, on the basis of birth date or other appropriate methods, so 
that such payments do not all occur on the 1st and 15th days of the 
month.
    (b) Report Required.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of the Treasury shall submit a 
report to the Congress regarding the results of the study described in 
subsection (a), along with any recommendations for legislative and 
administrative actions, including--
            (1) assessments of any administrative impact;
            (2) costs to the government;
            (3) any impact on depository institutions and beneficiaries 
        (including any potential lost or increased interest earnings);
            (4) convenience to beneficiaries and the government;
            (5) methods of implementation; and
            (6) transition mechanisms that should be taken.
    (c) Consultation.--The Secretary of the Treasury shall consult with 
the public in preparing the report required under subsection (b).

SEC. 15. STUDY AND REPORT ON UTILIZING THE UNITED STATES POSTAL SERVICE 
              AS A SUPPLEMENTAL PROVIDER OF GOVERNMENT CHECK CASHING 
              SERVICES.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study examining current fees and practices of check 
cashing outlets and the potential for enhancing the access of low 
income individuals to government check cashing services through the 
United States Postal Service.
    (b) Report Required.--Not later than 1 year after the date of 
enactment of this Act, the Comptroller General shall submit a report to 
the Congress regarding the results of the study described in subsection 
(a), along with any recommendations for Federal or State legislative or 
administrative action.

SEC. 16. STUDY AND REPORT ON DIRECT DEPOSIT PROGRAM FOR FEDERAL 
              RECURRING PAYMENTS.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study to assess the benefits and costs to the Federal 
Government of utilizing direct deposit versus paper checks to 
accomplish government payments. In conducting the study, the 
Comptroller General shall--
            (1) consider the administrative cost savings, if any, to be 
        accomplished through the utilization of direct deposit, such as 
        reduced paperwork and personnel involvement, streamlined and 
        cost-effective operations, and reduced postage expenses;
            (2) consider the loss in interest earnings to the Federal 
        Government as the result of the earlier relinquishment by the 
        Government of directly deposited funds, using data on major 
        beneficiary programs that utilize recurring Federal benefits 
        payments;
            (3) compare the relative costs and benefits to the Federal 
        Government of direct deposit versus paper check payments of 
        Government benefits; and
            (4) identify societal costs and benefits of direct deposit 
        with respect to safety, risk of loss to the individual and the 
        Government, convenience, reliability, and timeliness of 
        payments.
    (b) Report Required.--Not later than 6 months after the date of 
enactment of this Act, the Comptroller General shall submit a report to 
the Congress containing the results of the study described in 
subsection (a), along with any recommendations for legislative and 
administrative action that should be taken.

SEC. 17. EFFECTIVE DATE.

    This Act shall become effective 180 days after the date of 
enactment of this Act, except that sections 4 through 7 shall become 
effective on the date of enactment of this Act.

                                 <all>