[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4209 Reported in House (RH)]






                                                 Union Calendar No. 580
106th CONGRESS
  2d Session
                                H. R. 4209

                          [Report No. 106-983]

To amend the Federal Reserve Act to require the payment of interest on 
  reserves maintained at Federal reserve banks by insured depository 
                 institutions, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 6, 2000

Mrs. Kelly  (for herself, Mr. Maloney of Connecticut, and Mr. Metcalf) 
 introduced the following bill; which was referred to the Committee on 
                     Banking and Financial Services

                            October 17, 2000

Additional sponsors: Mr. Gonzalez, Mr. Hill of Montana, Mr. Forbes, Mr. 
          Watt of North Carolina, and Mr. Smith of New Jersey

                            October 17, 2000

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
To amend the Federal Reserve Act to require the payment of interest on 
  reserves maintained at Federal reserve banks by insured depository 
                 institutions, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Bank Reserves Modernization 
Act of 2000''.</DELETED>

<DELETED>SEC. 2. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE 
              BANKS.</DELETED>

<DELETED>    (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:</DELETED>
        <DELETED>    ``(12) Earnings on reserves.--</DELETED>
                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(B) Regulations relating to payments and 
                distribution.--The Board may prescribe regulations 
                concerning--</DELETED>
                        <DELETED>    ``(i) the payment of earnings in 
                        accordance with this paragraph;</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (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''.</DELETED>
<DELETED>    (c) Technical and Conforming Amendments.--Section 19 of 
the Federal Reserve Act (12 U.S.C. 461) is amended--</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (2) in subsection (c)(1)(A) (12 U.S.C. 
        461(c)(1)(A)), by striking ``subsection (b)(4)(C)'' and 
        inserting ``subsection (b)''.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bank Reserves Modernization Act of 
2000''.

SEC. 2. 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) 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. 3. TRANSFER OF FEDERAL RESERVE SURPLUSES.

    (a) In General.--Section 7(b) of the Federal Reserve Act (12 U.S.C. 
290) is amended by adding at the end the following new paragraph:
            ``(4) Additional transfers to cover interest payments for 
        fiscal years 2001 through 2005.--
                    ``(A) In general.--In addition to the amounts 
                required to be transferred from the surplus funds of 
                the Federal reserve banks pursuant to paragraph (1), 
                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 
                2001 through 2005.
                    ``(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 2001 
                through 2005, 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 2001 through 2005, 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 2001 
        through 2005, 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.''.
            Amend the title so as to read: ``A bill to amend the 
        Federal Reserve Act to authorize the payment of interest on 
        reserves maintained at Federal reserve banks by insured 
        depository institutions, and for other purposes.''.




                                                 Union Calendar No. 580

106th CONGRESS

  2d Session

                               H. R. 4209

                          [Report No. 106-983]

_______________________________________________________________________

                                 A BILL

To amend the Federal Reserve Act to require the payment of interest on 
  reserves maintained at Federal reserve banks by insured depository 
                 institutions, and for other purposes.

_______________________________________________________________________

                            October 17, 2000

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed