[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 229 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 229
To amend Federal banking law to permit the payment of interest on
business checking accounts in certain circumstances, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 31, 2001
Mr. Hagel introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend Federal banking law to permit the payment of interest on
business checking accounts in certain circumstances, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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)''.
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