[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[House]
[Pages 5347-5354]
[From the U.S. Government Publishing Office, www.gpo.gov]



              SMALL BUSINESS INTEREST CHECKING ACT OF 2001

  Mr. OXLEY. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 974) to increase the number of interaccount transfers which 
may be made from business accounts at depository institutions, to 
authorize the Board of Governors of the Federal Reserve System to pay 
interest on reserves, and for other purposes, as amended.
  The Clerk read as follows:

                                H.R. 974

       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 ``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       ``(i) [Repealed]''.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       ``(g) [Repealed]''.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

[[Page 5348]]

     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

[[Page 5349]]

     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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Ohio (Mr. Oxley) and the gentleman from New York (Mr. LaFalce) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).


                             General Leave

  Mr. OXLEY. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and to include extraneous material on H.R. 974, the bill now 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. OXLEY. Madam Speaker, I yield myself 5 minutes, and I rise today 
in support of H.R. 974, the Small Business Interest Checking Act. H.R. 
974 lifts the ban on the payment of interest on checking accounts, 
increases the number of transfers which may be made from business 
accounts to depository institutions, authorizes the Federal Reserve to 
pay interest on sterile reserves, and gives the Fed flexibility in 
setting reserve limits.
  The changes in current law made by H.R. 974 are long overdue and 
represent our continued efforts to update outdated laws that ultimately 
limit the choices of small businesses and consumers.
  The legislation provides that after 2 years banks will be able to 
offer interest-bearing checking accounts to all customers. Because of a 
quirk in current law, America's small businesses are the only entities 
that currently have little choice but to allow their money to sit idly 
in banks. This legislation will allow those small businesses to put 
their money to work.
  The bill will also allow banks to earn interest on the money they are 
required by law to hold with the Federal Reserve. Like small 
businesses, America's banks currently must hold money in accounts which 
give them no return. This has created an incentive for banks to put 
their money elsewhere, which in turn can damage the Federal Reserve's 
ability to conduct monetary policy. The Federal Reserve supports us in 
this long-overdue change.
  The bill will also give the Federal Reserve flexibility in setting 
reserve requirements, so that the market can respond to changing 
economic conditions.
  The amendment will allow certain depository institutions to offer NOW 
accounts to all of their customers and clarify that certain 
transactions in connection with real estate escrow accounts are not to 
be treated as ``interest'' for any purpose under the legislation that 
we are considering.
  The only difference between H.R. 974 that we consider today and the 
reported bill is an amendment requested by the Fed that describes the 
types of depository institutions which will be able to offer business 
NOW accounts.
  Madam Speaker, I thank the gentlewoman from New York Mrs. Kelly) and 
the gentleman from Pennsylvania Mr. Toomey) for their leadership that 
they have shown on this issue. I also thank the gentleman from New York 
Mr. LaFalce), the ranking member, for his cooperation in moving this 
important bill.
  Madam Speaker, the legislation we consider today advances the work 
begun by Congress with the passage of the Gramm-Leach-Bliley Act to 
make America's financial services industry more efficient, and to 
provide consumers with more options.
  Madam Speaker, I urge my colleagues to support passage of H.R. 974.
  Madam Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, I agree with the overall thrust of H.R. 974, the Small 
Business Interest Checking Act, which permits banks and thrifts to 
offer interest-bearing business checking accounts; and I, therefore, 
support its adoption.
  The repeal of the ban on interest-bearing business checking accounts 
represents another important step in the modernization of our financial 
services industry. The ban was adopted in the Great Depression out of 
fear that banks seeking business accounts would bid against each other 
with higher interest rates and thus contribute to bank insolvencies. 
The Federal banking agencies have all concluded, however, that the ban 
no longer serves any useful public purpose; that it is outdated in the 
modern financial services environment, and I concur.
  Madam Speaker, this legislation promotes healthy competition within 
the financial services community for commercial checking accounts, 
which can only benefit the business community, and most especially the 
small business community, with more efficient, cost-effective financial 
services.

                              {time}  1615

  The current law and market conditions prevent many small businesses 
from obtaining easy access to interest-bearing checking accounts. For 
this reason, it is important that repeal of the ban be accomplished 
with a minimum of delay. The 2-year phase-in provided for in the bill, 
with 24 sweeps per month for money market demand accounts in the 
meantime, represents a fair compromise of the competing interests, 
although I personally would have preferred a shorter phase-in period.
  However, I do have some reservations about the policy priorities 
represented by other provisions in the bill, provisions permitting the 
Federal Reserve Banks to pay interest on reserves. It is estimated that 
the sterile reserve provision will use $1.1 billion of the projected 
surplus over the next 10 years. I am conscious of the view of many in 
the banking industry that the combination of required reserves and the 
inability to receive interest on those reserves is a burden on the 
industry.
  I understand that. However, I believe that there are other priorities 
that should take precedence over interest on sterile reserves, 
priorities that provide funding for homes for the homeless, adequate 
funding for food for our hungry, adequate funding for medicine and 
health care for our sick. These and other governmental corporal works 
should be given far greater precedence and priority by this body on 
this floor of the House.
  Nevertheless, I support the bill, not only because it provides access 
to financial services for small businesses but also because it will 
improve Congress' ability to monitor the problem posed by ever-
increasing bank fees. This was a very important amendment that we 
offered to the bill during markup which requires an annual assessment 
of the fees charged to retail bank customers. With fees representing an

[[Page 5350]]

ever-growing share of bank earnings, an annual survey of retail bank 
fees becomes much more important than ever.
  Mr. Speaker, I believe that H.R. 974 accomplishes two sound policy 
objectives. It provides small business easy access to interest-bearing 
checking accounts and it provides a much needed survey of retail 
banking fees. For those particular reasons, I support its adoption by 
the House.
  Mr. Speaker, I reserve the balance of my time.
  Mr. OXLEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Alabama (Mr. Bachus), the chairman of the Subcommittee on Financial 
Institutions and Consumer Credit.
  Mr. BACHUS. Mr. Speaker, I rise in strong support for this 
legislation. I want to commend the chairman of the Committee on 
Financial Services for bringing this common sense measure to the floor 
today, for doing it promptly.
  What does this legislation mean? What will it do? I have a letter 
here from the National Association of Federal Credit Unions which says 
that it will mean two things. It will mean that their customers, small 
businesses and their members of the credit unions will receive interest 
on their accounts, and it also means that their loan rates will be 
lower.
  So I think anything we can do to lower the cost of loans for 
consumers is good. I think anything we can do to allow small 
businesses, whether they bank at a bank or a thrift or they are members 
of a credit union to be able to draw interest on those. It really is 
legislation that is going to benefit small businesses, whether they are 
the small banks, the thrifts or the credit unions or the small 
businesses that put deposits in those institutions. Large corporations 
already get implicit interest because large financial institutions have 
complex programs such as sweeps which allow the payment of something 
very akin to interest. But it is the small businesses today that have 
been denied the right to draw interest. That is why the NFIB and the 
Chamber of Commerce totally supports this legislation and has endorsed 
it.
  It will also allow small banks, thrifts and credit unions in our 
hometowns to compete against large international financial 
conglomerates and large financial banks because it will make them more 
competitive and will allow them to keep more of their deposits. That is 
why the associations representing our small banks and our thrifts have 
endorsed this legislation.
  Finally, I want to praise the gentleman from Pennsylvania and the 
gentlewoman from New York who authored this legislation. We will hear 
from the gentlewoman from New York (Mrs. Kelly) in a minute. I also 
want to praise a freshman member, the gentlewoman from Pennsylvania 
(Ms. Hart), for her active work on this bill.
  Finally, I would like to address what the gentleman from New York 
said about paying interest on regulation D reserves at the Federal 
Reserve. The Federal Reserve and the Treasury both came before us; and 
the Federal Reserve said if we are to maintain a solid monetary policy, 
a sound dollar, we need this legislation. That is reason enough to pass 
this.
  Mr. Speaker, I include for the Record the following letter from the 
National Association of Federal Credit Unions that I referred to in my 
remarks:

                                           National Association of


                                        Federal Credit Unions,

                                    Washington, DC, April 2, 2001.
     Hon. Spencer Bachus,
     Chairman, Subcommittee on Financial Institutions & Consumer 
         Credit, House of Representatives, Washington, DC.
       Dear Chairman Bachus: I am writing on behalf of the 
     National Association of Federal Credit Unions (NAFCU), the 
     only national trade association that exclusively represents 
     the interests of our nation's federal credit unions, to 
     express our support for H.R. 974 as approved by the Financial 
     Services Committee. NAFCU supports this effort to allow 
     payment of interest on Regulation D reserve requirements of 
     depository institutions, to increase the number of allowed 
     transfers of non-interest-bearing accounts into those paying 
     interest, and to include credit unions in a regular bank fee 
     study by the Federal Reserve. NAFCU thanks you for your 
     leadership on this issue and urges passage of H.R. 974.
       Regulation D imposes costly burdens on regulated financial 
     institutions such as federal credit unions. As member-owned 
     cooperatives, credit unions have no choice but to pass the 
     opportunity cost resulting from the posting of sterile 
     reserves along to their members either in the form of lower 
     dividend rates on savings, higher rates on loans, or some 
     combination of the two. Under Regulation D Federal credit 
     unions are required to structure accounts to meet regulatory 
     definitions, limit transactions to required types and 
     numbers, and must forego interest on sterile reserves. The 
     cost of Regulation D contributes to the continuing exodus of 
     savings from regulated financial institutions to the stock 
     market, mutual funds, and other products of largely 
     unregulated financial service providers.
       The current Regulation D reserve ratios are 3% for 
     transaction balances between $0 and $42.8 million with an 
     exemption for balances below $5.5 million. For institutions 
     with reservable balances in excess of $42.8 million, the 
     reserve requirement is $1,329,000 plus 10% of the deposits 
     above $42.8 million. Based on NAFCU year-end 2000 data and 
     utilizing the current Regulation D tranches and ratios, 866 
     federally-chartered credit unions are currently required to 
     post $1,276,386,000 in required reserves. If legislation were 
     enacted into law today and the Federal Reserve were to pay 
     interest at the current Federal Funds rate of 5.5%, then 
     these credit unions and their member owners would 
     collectively receive $70,201,230 in interest.
       As of December 2000, 121 credit unions had $12.95 billion 
     in reservable balances in excess of $42.8 million and 
     required reserves of $938.7 million. Another 745 credit 
     unions, with $11.12 billion in reservable balances, had to 
     hold $337.6 million in required reserves.
       With its non-payment of interest on sterile reserves, 
     Regulation D gives an unfair advantage to non-regulated 
     financial institutions that offer checking accounts but do 
     not have to maintain sterile reserves with the Fed.
       Furthermore, NAFCU supports the language sought by 
     Representative John LaFalce (D-NY) and included by the 
     Financial Services Committee to make permanent the bank fee 
     study by the Federal Reserve Board and to include credit 
     union fees as part of that study.
       NAFCU appreciates your leadership on this issue and thanks 
     you for pursuing this legislation. We urge the House to pass 
     this important legislation. If I or my staff may be of 
     assistance to you or if you have any questions or desire 
     further information please do not hesitate to contact me or 
     NAFCU's Director of Legislative and Political Affairs, 
     Charlie Frohman, at (703) 522-4770.
           Sincerely,
                                               William J. Donovan,
                            Senior Vice President/General Counsel.

  Mr. OXLEY. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentlewoman from New York (Mrs. Kelly), the chairwoman of the 
Subcommittee on Oversight and Investigations.
  Mrs. KELLY. Mr. Speaker, I want to thank the gentleman from Ohio for 
both yielding me the time and for his considerable efforts to move this 
legislation forward. I also want to thank my fellow New Yorker, ranking 
member, the gentleman from New York (Mr. LaFalce), for his work on this 
issue and for allowing us to bring this legislation to the floor under 
suspension today.
  My legislation today can be passed in such a way in which everyone 
wins. This has been an issue which has been pending before the Congress 
for the past 6 years. Last year, our committee passed everything before 
us now by a voice vote; and the full House also passed these provisions 
by a voice vote. It is my hope we can do that again today.
  The Small Business Interest Checking Act contains four initiatives. 
First, to repeal the prohibition on allowing banks to pay interest on 
business checking accounts after a transition period. This prohibition 
has been in place since the 1930s.
  While I believe it should be repealed, I believe a proper transition 
period is critical. The 2-year transition contained in this bill is not 
adequate in my estimation. However, I believe it is time that this 
legislation does move forward.
  Second, this legislation allows banks to increase money market 
deposits and savings accounts sweeps from the current 6 to 24 times a 
month. This gives banks an increase in their sweep activities, enabling 
them to sweep every night, increasing the interest which businesses can 
make on their accounts.
  Third, the bill gives the Federal Reserve the authority to pay 
interest on reserves banks keep in the Federal Reserve system. This is 
good economically since it will bring stability to the

[[Page 5351]]

Federal funds rate which is subject to volatility when the reserves 
become too low. It is also good public policy since these reserves have 
functioned as an implicit tax on our banks and would partially offset 
the costs of a repeal of the prohibition on business checking.
  Fourth and finally, my bill gives the Federal Reserve the additional 
flexibility to lower the reserve requirements. This will give the 
Federal Reserve greater control at maintaining reserves at a specific 
and consistent level.
  My goal in this legislation is to best help our main street banks 
which are so essential to our small communities. Without their support, 
our communities would struggle where they are now thriving and stall 
where they now move. Quite simply, this legislation is about creating 
new and broader market options. We allow banks to pay interest on 
business checking accounts. We allow banks to increase sweep 
activities. And we allow the Fed to pay interest on the reserves all 
banks are required to keep with them. We also allow the Fed to lower 
reserve requirements. We do not require or mandate anything. This way 
we can allow the market to create change, not the government.
  Mr. Speaker, I have much, much more to say on this legislation but in 
the interest of time, I will place the rest of my comments in the 
Record. I again thank the gentleman from Ohio for his strong leadership 
on this issue and for the swift consideration of this legislation. I 
ask my colleagues on both sides of the aisle to join me in strong 
support for this common sense bipartisan legislation.
  Mr. Speaker, I want to thank the gentleman from Ohio [Mr. Oxley] for 
both yielding me the time and for his considerable efforts to move this 
legislation forward. I also want to thank my fellow New Yorker, Ranking 
Member LaFalce, for his work on this issue and for allowing us to bring 
this legislation to the floor under suspension today. In addition, I 
want to thank the gentleman from Alabama [Mr. Bachus] for his work as 
well as the gentleman from Pennsylvania [Mr. Toomey] for the very 
significant contribution he made to this legislation with his bill, 
H.R. 1009, which was merged into my bill during committee 
consideration.
  My legislation today can be passed in such a way in which everyone 
wins. This has been an issue which has been pending before Congress for 
the past six years. Last year our committee passed everything now 
before us by voice vote and the full House also passed these provisions 
by a voice vote.
  Provisions of this legislation enjoy strong support from a diverse 
group of associations. The list of these groups includes the American 
Bankers Association, America's Community Bankers, The National 
Federation of Small Businesses, The Financial Services Roundtable, The 
National Association of Federal Credit Unions, The National Chamber of 
Commerce, The Credit Union National Association, and The National Farm 
Bureau.
  Mr. Speaker, one issue which has held this legislation up in past 
years has been the issue of the transition period from the bill's 
enactment to when banks are allowed to pay interest on business 
checking accounts. Currently, the bill contains a two year transition 
period. This is a shorter transition period than was contained in 
Congresswomen Roukema's bill, H.R. 1585, the Depository Institutions 
Regulatory Streamlining Act, in the 105th which passed the House on 
October 8, 1998 by voice vote. How many years was the delay in H.R. 
1585? Six years. Again last year the House passed Congressman Metcalf's 
bill, H.R. 4067, which again contained this issue, but this time 
contained a three year transition period. I supported that deal last 
year and continue to support a three or four year transition period. 
This transition period are not arbitrary and have been contained in 
laws that have made changes to interest payments in the past. When 
Congress enacted legislation to gradually remove interest rate controls 
on consumer checking accounts in the 1980s (Reg Q), it did so with a 
six-year transition period.
  We have listened to testimony before the Financial Services committee 
about why banks need this transition period to unravel the agreements 
they currently have with their business customers. Those groups 
advocating for shorter transition periods unfortunately seek to create 
instability in the banking sector. For some this is intentional. The 
Thrifts, until recently, were prohibited from business checking 
activities. They would like this authority in attempt to attract 
business clients from the banks. I don't blame them for this, but the 
small community banks with assets under $2 billion will suffer under 
this scenario without a transition.
  Those who argue that since there is no transition period in the bill 
for the Fed to pay interest on reserves ignore the innumerable 
differences between banks and the Fed and the very different reasons we 
are changing these laws. One has to do with effective monetary policy 
of the Fed and the other about the more efficient operation of our 
banks.
  Let me also clear the air on another point. The Federal Reserve is 
opposed to a transition period of this length. They see this in a 
purely economic perspective. They believe that the disruptions this 
policy presents will work themselves out.
  Well I stand in strong disagreement with the Fed's read of this 
issue. Banks have long established relationships with the business 
customers they serve. These banks, while being prohibited in paying 
interest on reserves provide other tangible benefits to their business 
customers, such as doing the payroll for the business.
  These banks need time to properly prepare for this change we are 
proposing to the law. They need to be able to sit down with their 
commercial accounts when their loans turn over, which is every few 
years.
  Some may speak about wasteful sweep activities. Sweeps may be more 
complicated but they do not hurt the small banks that way. The repeal 
of the prohibition will. Sweeps are temporally invested outside of the 
bank typically in safe repurchase agreements involving T-bills. This 
imposes zero cost to the bank and the commercial accounts can earn 
interest. I also refer to an article from the American Banker I 
inserted into the record during a hearing last May. It stated that the 
majority of small banks operate sweep accounts. The computer programs 
are becoming much simpler and less costly to handle these activities. 
Additionally, if banks can do this every day they are not limited to 
commercial customers that keep large balances in the accounts.
  Some will say that this bill does not require the payment of interest 
on commercial accounts, it just allows it. That's true but the market 
place will require it in order to remain competitive.
  Let me sum this up with one final observation. The banks that will be 
hardest hit with this new cost will be the smaller banks. This will 
make them more liable to takeovers and jeopardize the best friend of 
the small businesses--Small banks. We must do everything we can to 
preserve small banks. They need time to prepare, and should at least 
give them more time to do so.
  Again, I want to thank the Gentleman from Ohio, [Mr. Oxley] for his 
strong support and leadership on this issue. I also want to thank all 
of the others I have worked with on this issue that deserve some of the 
credit, this list includes former Congressman Jack Metcalf, for whom 
these issues were one of his highest priorities; Congressman Jim Leach, 
whose leadership on these issues ensured a fair debate; Congresswoman 
Marge Roukema, whose attention to these issues has been both helpful 
and thoughtful; Congressman Spencer Bachus, whose insights and 
encouragement have helped drive this debate; Congressman Pat Toomey, 
who brought his first hand experience and considerable knowledge to 
this issue; Senator Charles Schumer, for his strong support for our 
priorities on this legislation in the Senate; I also need to thank the 
staff, especially Terry Haines, Bob Foster, Hugh Halpern, Gregg Zerzan, 
Jim Clinger, Garry Parker, Laurie Schaffer, and Alison Watson.
  Without the assistance of these good folks we would not have been 
able to bring such a strong bill to the floor this year. We have before 
us the best opportunity to move this legislative package through the 
process. I hope we are able to take advantage of this opportunity. I 
stand ready to work with all interested parties to ensure that this 
legislation truly benefits all concerned.
  Mr. OXLEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Pennsylvania (Mr. Toomey) who has been a leader and one of the original 
sponsors of this legislation.
  Mr. TOOMEY. Mr. Speaker, I want to thank the gentleman from Ohio for 
yielding me this time.
  Mr. Speaker, I rise today to urge my colleagues to pass H.R. 974. 
This is a bill that contains a number of very good, sensible 
provisions. As we have heard, it will allow the Federal Reserve to pay 
interest on sterile reserves; and we have heard that it will give 
flexibility to the Federal Reserve in setting reserve requirements 
which in turn will help in maintaining our monetary policy.

[[Page 5352]]

  This bill also includes language from H.R. 1009 which I introduced to 
allow banks to pay interest on commercial checking accounts. Now, as we 
all know and we recall from last year, we passed sweeping modernization 
legislation, modernizing the legal framework within which the financial 
services industry is regulated. It was historic legislation. We 
repealed antiquated laws that dated back to the Depression. But we 
missed one, we might have missed more than one, but one that we missed 
was repeal of the prohibition on interest on corporate checking 
accounts. So today we are going to take that up, among other things.
  Let me address that specifically as a part of the bill that I had 
focused mostly on. First of all, repealing the prohibition on interest 
on business checking is not really for big banks. Oh, it will apply to 
big banks but as a practical matter, big banks, large, sophisticated 
financial institutions have the means to circumvent this prohibition 
and they have done so for years, quite legally, quite appropriately. 
Through a very sophisticated series of transactions, they can offer 
implicit interest if not explicit interest.
  This really is also not for large corporations. As the gentleman from 
Alabama mentioned earlier, large corporations have ways around this as 
well. They have sophisticated Treasury operations. They have the 
ability with extensive full-time staff to make sure they do not have 
idle cash sitting there not earning interest.
  What this legislation is really for is small banks and small 
business. It is for small banks that do not have the means to develop 
ways to circumvent the prohibition. It will allow them simply to 
directly pay the interest that they want to pay so that they can 
compete with the larger institutions and can attract deposits.
  And it is for small businesses, small businesses that do not have the 
resources to have a Treasury operation. They do not have the manpower 
to devote countless hours to making sure there are no idle reserves. 
What this bill is going to do is it is going to allow those small 
businesses which struggle so much to provide so many jobs and so much 
of the vigorous growth in our economy in recent years, it is going to 
allow them to be a little more competitive and give them a little bit 
more of a break by allowing them to earn interest on the deposits that 
they own.
  It is quite appropriate also as the gentlewoman from New York pointed 
out that there is no mandate in this bill. This simply allows business 
and banking institutions to decide amongst themselves without the 
prohibition of government to decide how much if any interest will be 
paid on these accounts. But I am confident that market pressures being 
what they are will develop an habitual interest for these balances as 
ought to be the case.
  It is long overdue. I think we are getting to the point where we are 
going to pass this legislation. I am hopeful that the other Chamber 
will do likewise. I just want to thank the chairman, the gentleman from 
Ohio (Mr. Oxley). I would also like to thank the gentleman from 
Pennsylvania (Mr. Kanjorski) and the gentleman from Alabama (Mr. 
Bachus) for their leadership in this effort as well as the ranking 
member, the gentleman from New York (Mr. LaFalce). I urge my colleagues 
to pass this legislation.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from New Jersey (Mrs. Roukema), the chairwoman of the 
Subcommittee on Housing and Community Opportunity.
  Mrs. ROUKEMA. Mr. Speaker, I certainly want to express my strong 
support for this legislation and urge that it be passed. I want to 
particularly commend the gentlewoman from New York (Mrs. Kelly) and 
certainly the gentleman from Alabama (Mr. Bachus), the chairman of the 
Subcommittee on Financial Institutions and Consumer Credit, for what 
they have outlined in their opening statements and associate myself 
with their remarks.
  I do want to also make the observation that this was passed, at least 
in the House, in the 105th and the 106th Congress. I am hopeful that 
this time, the third time ``will be the charm'' and that we are going 
to get this passed. It makes absolute, complete sense. Although I was 
one that originally wanted the 3-year phase-in, I believe that this 
bill strikes the proper, good compromise, using the 2-year phase-in.

                              {time}  1630

  Of course, the NFIB and the U.S. Chamber, as has already been 
reported, strongly support the repeal; and we have a large segment of 
the banking industry and the thrift industries that are supportive. I 
guess I just have to say that this is long overdue. It is a compromise 
with the 2-year phase-in which will be included in this bill, and I 
trust that we will finally be successful this year. Again, long overdue 
and we must do our job here today.
  The controversy in past Congresses and during consideration in the 
Financial Services Committee this year has been the appropriate time 
frame for repeal.
  While I support a 3-year phase-in, I believe the bill before us today 
strikes a good compromise between the one year and three year 
alternatives. The one year transition period in the original bill is 
just too short. Removing the prohibition against the payment on 
commercial Demand Deposit Accounts raises a variety of difficult 
transition issues, especially for smaller financial institutions.
  Banks currently assume a stable deposit base with stable costs when 
they enter commercial checking account relationships with small 
businesses. These contractual relations frequently include a number of 
other products--such as loans for periods ranging from 5-25 years--at a 
price and for a period of time that takes into account that the bank is 
not paying interest on the underlying business checking account.
  The immediate implementation of paying interest on those accounts 
would disrupt the cost/profit assumption under which those loans were 
made and would require a renegotiation of the overall relationship. If 
banks are required to pay interest immediately, they would be required 
to adjust investment portfolios at a time of high market volatility.
  Banks will be required to review all current customer contracts; 
determine steps necessary to honor existing commitments for both public 
and private sectors. Many contracts, particularly those with state, 
local and federal governments have time periods from 12-36 months and 
would require substantial adjustments.
  Mr. Speaker, this legislation is long overdue and with the compromise 
of a two year phase in which is included in this bill, I trust that we 
can finally enact this legislation this year. I urge my colleagues' 
support.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would point out that this was a brilliant maneuver on 
the part of the committee. There were arguments whether it should be an 
extension of 3 years or 1 year, and after great deliberation and a lot 
of hard work we decided to compromise on 2 years.
  They said it could not be done, but we were able to do that; and I 
want to thank everybody for their participation.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Pennsylvania 
(Ms. Hart), a new member of our committee and a very valuable member.
  Ms. HART. Mr. Speaker, I also rise in support of H.R. 974. I am a big 
fan of giving flexibility to people in their own businesses. 
Understanding that banks are heavily regulated and understanding also 
that there was a concern when this initial law was instituted back in 
the 1930s, that was a long time ago, Mr. Speaker, and it is no longer 
reasonable for us to be concerned that these banks will put themselves 
out of business by paying interest to their business customers.
  Mr. Speaker, this legislation abolishes a ban that is long overdue, 
preventing banks from offering interest on their business checking 
accounts. I do not think it is time for us anymore to be worried that 
these banks would fail because they would pay interest to their 
business customers. In fact, as a result of Graham-Leach-Bliley, this 
is just the natural next step.
  We tried to give the financial services industries more flexibility. 
We succeeded with Graham-Leach-Bliley, and I think this is simply the 
next step. I believe that the men and women who run our financial 
institutions certainly have the training and are much more competent 
than we are to make those business decisions for them.

[[Page 5353]]

  This policy actually prevented a lot of those financial institutions, 
those small banks, from being competitive; and like many other 
districts across the country, my district is heavily populated with 
some very strong, very successful financial institutions, the Main 
Street banks that keep a lot of people employed and that provide a very 
good resource for a lot of small businesspeople.
  This will certainly allow them to provide even more of a resource for 
small businesspeople, those who are building up their businesses and 
want to support the other industries within their own hometown. Now, 
that hometown bank will be able to provide them with an additional 
incentive to invest with them.
  Mr. Speaker, it promotes competition. It promotes consumer 
convenience. It will repeal, as I said, an outdated and I believe 
anticompetitive impediment to attracting these interest-bearing 
accounts to these smaller financial institutions, but also to give the 
larger financial institutions an opportunity to offer interest.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Nebraska (Mr. Bereuter), the chairman of the Subcommittee on 
International Monetary Policy and Trade.
  Mr. BEREUTER. Mr. Speaker, I thank the gentleman from Ohio (Mr. 
Oxley) for yielding me time to speak on this legislation.
  Mr. Speaker, I commend the gentleman and the ranking member, 
particularly the gentlewoman from New York (Mrs. Kelly), for her 
effort; the gentleman from Alabama (Mr. Bachus.) This has been, as was 
mentioned, 3 years in the making.
  Much has been said, and I would extend my remarks to cover some of 
the details that have been covered in part by others or perhaps wholly; 
but I want to say that the emphasis should be here on the positive 
effect that this will have on small businesses nationwide, not just 
banks but their small business customers. I think that is the most 
important thing for us to consider. Yes, it affects sterile reserves 
that the Fed holds, and it permits those sterile reserves to bring 
interest to the banks involved. I think that is only a matter of 
equity.
  The most important part, I think, is the fact that the banking laws 
implemented during the Great Depression are changed. They have 
prohibited banks and thrifts from paying interest on business checking 
accounts. What I expect to happen now is that we are going to have a 
competition among financial institutions to take advantage of this 
opportunity to pay interest on these checking accounts.
  This has, in effect, been done, as mentioned, by large banks in a 
different way. Small banks have not had the technical expertise or the 
capacity to offer this service by sweeps to small customers, small 
business customers. This will now be possible. It deserves our support. 
I urge my colleagues of the whole House to vote yes on this 
legislation.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of H.R. 974, 
Small Business Interest Checking Act. This bill is a step in the right 
direction because it aims at diminishing the comparative disadvantage 
that certainly exists for small banks and small businesses.
  Banking laws implemented during the Great Depression currently 
prohibit banks and thrifts from paying interests on business checking 
accounts. Large banks often get around this restriction, however, by 
periodically transferring a company's checking account to an interest-
bearing account--with the money transferred back after it has earned 
interest. But banks are only allowed to make such transfers six times 
per month, and small banks often cannot offer these ``sweep'' accounts 
because of legal constraints or because they lack the technical 
expertise to do so. Consequently, smaller banks and the small 
businesses that bank at those institutions are often left at a 
competitive disadvantage.
  H.R. 974 allows banks and thrifts to pay interest on balances held in 
business checking accounts, and it permits the Federal Reserve to pay 
interest on the Fed-held ``sterile'' reserves of bank. At the moment, 
they obtain no interest. This bill is intended to eliminate the 
competitive disadvantage that currently exists for both small banks and 
small businesses concerning business-checking accounts. It is also 
aimed at encouraging banks to leave funds in those accounts for which 
they must post cash reserves with the Federal Reserve--which would 
boast reserves held by the Federal Reserve and thereby enhance its 
ability to conduct national monetary policy.
  For example, the bill allows--but does not require--the Federal 
Reserve to pay interest on the cash reserves that banks are required to 
maintain at Federal Reserve banks. The rate of interest to be paid 
would be paid by the Federal Reserve, but could not exceed the general 
level of short-term interest rates.
  Any mechanisms that may facilitate the growth of small businesses in 
the banking industry are very important. For this reason, I support 
this measure. Under the proposed legislation, small business may now 
obtain an interest on their banking accounts. We must do our best to 
assist our small businesses in eliminating barriers to economic growth.
  Mr. ROGERS of Michigan. Mr. Speaker, I rise today to support 
legislation that would abolish a Depression-era ban that prevents banks 
from offering interest on business checking accounts. Small businesses 
are hit particularly hard by the current prohibition, because they are 
typically unable to help larger depositors circumvent the prohibition. 
While larger businesses have the financial resources to use sweep 
arrangements, these products are not offered to small businesses 
because they cannot make the minimum investment necessary to 
participate in ``sweeps.''
  As part of a small, family-owned home building business in Michigan, 
I know firsthand how slim the margins of operating a small business can 
be. This is why the Small Business Interest Checking Act is so 
important to our hometown retailers and businesses because it would 
give these smaller operations the opportunity to finally earn a much-
needed market rate of return on their deposits. And any businessman or 
women in the country will tell you what a difference an extra 
percentage or two can make to their bottom line.
  As approved by the Committee on Financial Services, the Small 
Business Interest Checking Act contains language completely repealing 
the prohibition two years after enactment. The phase-in is included to 
assist institutions that currently offer sweep account arrangements, 
which are often based on multi-year contractual agreements. While I am 
personally of the preference that small business would benefit the most 
from legislation providing banks the voluntary option to pay interest 
on business checking accounts without a delay, I strongly support H.R. 
974 and encourage my House colleagues do the same.
  Mr. ROYCE. Mr. Speaker, I rise in support of H.R. 974 and I would 
like to take just a moment to address a provision affecting the twenty-
two industrial banks in my State of California.
  Chairman Oxley was good enough to include in the Committee reported 
version of H.R. 974 a provision I requested offering a measure of 
equity and fairness to these twenty-two industrial banks as we 
implement a national policy permitting interest on business checking 
accounts. I want to thank him and his staff for their assistance in 
this matter.
  This provision, in Section 3 of H.R. 974, has now been amended to 
reflect comments offered by the Federal Reserve. The provision amends 
the Federal Deposit Insurance Act by adding a new paragraph (3) to 
Section 2 of that Act (PL-93-100).
  H.R. 974 would therefore permit a California industrial bank to offer 
to any account holder, including a business entity, interest bearing 
negotiable orders of withdrawal--commonly called NOW accounts--so long 
as applicable California law continues to prohibit industrial banks 
from offering demand deposit accounts--which it does, and so long as 
the California industrial bank is not an affiliate of any company or 
companies whose aggregate assets are more than ten percent of the total 
assets of that particular industrial bank.
  As a practical matter, I believe this provision would enable all of 
California's twenty-two industrial banks to offer NOW accounts to 
business entities, if they so choose.
  California industrial bank law has been--and remains in its most 
recent reform--explicit in its prohibition against industrial banks 
accepting demand deposit (checking) accounts. Also, for the most part, 
California's industrial banks are small depository institutions and few 
have operating subsidiaries or own other companies. It is also 
apparently the case that no California industrial bank currently has 
operating subsidiaries or owns a company or companies whose aggregate 
assets exceed 10% of that bank's total assets. While this later 
limitation may be somewhat restrictive with respect to the growth of 
any existing operating subsidy, or the addition of operating subsidies 
in the future, California's industrial banks have indicated they are 
prepared to work within this particular limitation.

[[Page 5354]]

  Finally, it is important to note that those few California industrial 
banks currently choosing to offer NOW accounts to individuals and 
charitable organizations are subject to regulations, including standard 
reserve requirements, promulgated by the Federal Reserve System. In 
permitting these industrial banks to also offer NOW accounts to 
business entities, H.R. 974 changes none of these requirements.
  I thank the distinguished Manager for permitting me to make this 
clarification and for his support of fairness and equity for 
California's industrial banks.
  Ms. WATERS. Mr. Speaker, I strongly oppose H.R. 974, the Small 
Business Checking Act of 2001, which represents an example of mixed-up 
budget priorities. It is particularly inappropriate to consider this 
extraordinarily unbalanced legislation under suspension of the rules, 
denying my colleagues who are not members of the Financial Services 
Committee an opportunity to have their concerns addressed.
  I agree that the Depression-era ban on interest-bearing business 
checking accounts serves no public policy purpose, and I would have 
supported repeal of the prohibition, provided it had been accomplished 
in a clean bill. However, I cannot in good conscience support this bill 
because it contains a provision that results in a transfer of taxpayer 
money to a very small segment of the country's largest and most 
powerful depository institutions, while other budget priorities are 
left unfunded or underfunded.
  The provision permitting the Federal Reserve banks to pay interest on 
the sterile reserves maintained by depository institutions in Federal 
Reserve Banks will result in the annual transfer of about $100 million 
in real taxpayer dollars to about 1700 of the approximately 21,000 
depository institutions in this country. Thirty of the largest, most 
powerful financial institutions will receive one-third of the interest 
that the Federal Reserve Banks will pay out each year.
  The Administration has proposed a broad-based tax cut proposal that 
will consume $2 trillion of the budget surplus. We do not know how we 
will pay for the President's tax cut, while meeting the other budget 
priorities of the Administration, addressing critical needs of the 
American public, paying down the debt and protecting Social Security 
and Medicare. Yet, the Small Business Checking Act will make the job 
harder by using $1.1 billion of the surplus over ten years to provide a 
benefit to a very small subset of the American taxpayers. The $1.1 
billion could be put to better use by providing adequate funding for 
combating AIDS in Africa or restoring part of the $2 billion in housing 
cuts the Administration has proposed or, even, tax relief for the 
average taxpayer.
  Mr. LaFALCE. Mr. Speaker, I yield back the balance of my time.
  Mr. OXLEY. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Shays). The question is on the motion 
offered by the gentleman from Ohio (Mr. Oxley) that the House suspend 
the rules and pass the bill, H.R. 974, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  The title of the bill was amended so as to read:
       Amend the title so as to read ``A bill to repeal the 
     prohibition on the payment of interest on demand deposits, to 
     increase the number of interaccount transfers which may be 
     made from business accounts at depository institutions, to 
     authorize the Board of Governors of the Federal Reserve 
     System to pay interest on reserves, and for other 
     purposes.''.



  A motion to reconsider was laid on the table.

                          ____________________