[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[House]
[Pages 4049-4053]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 BUSINESS CHECKING FREEDOM ACT OF 2002

  Mr. TOOMEY. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1009) to repeal the prohibition on the payment of interest 
on demand deposits, as amended.
  The Clerk read as follows:

                               H.R. 1009

       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 ``Business Checking Freedom 
     Act of 2002''.

     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       ``(i) [Repealed]''.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       ``(g) [Repealed]''.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) by redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively; and
       (2) by inserting after subsection (a) the following:
       ``(b) Notwithstanding any other provision of law, any 
     depository institution may permit the owner of any deposit or 
     account which is a deposit or account on which interest or 
     dividends are paid and is not a deposit or account described 
     in subsection (a)(2) to make up to 24 transfers per month (or 
     such greater number as the Board of Governors of the Federal 
     Reserve System may determine by rule or order), for any 
     purpose, to another account of the owner in the same 
     institution. An account offered pursuant to this subsection 
     shall be considered a transaction account for purposes of 
     section 19 of the Federal Reserve Act unless the Board of 
     Governors of the Federal Reserve System determines 
     otherwise.''.

     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)(A), 
     in a Federal reserve bank by any such entity on behalf of 
     depository institutions.
       ``(C) Depository institutions defined.--For purposes of 
     this paragraph, the term `depository institution', in 
     addition to the institutions described in paragraph (1)(A), 
     includes any trust company, corporation organized under 
     section 25A or having an agreement with the Board under 
     section 25, or any branch or agency of a foreign bank (as 
     defined in section 1(b) of the International Banking Act of 
     1978).''.
       (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''.

[[Page 4050]]

       (c) Consumer Banking Costs Assessment.--
       (1) In general.--Section 1002 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 
     note) is amended to read as follows:

     ``SEC. 1002. SURVEY OF BANK FEES AND SERVICES.

       ``(a) Annual Survey Required.--The Board of Governors of 
     the Federal Reserve System shall obtain annually a sample, 
     which is representative by type and size of the institution 
     (including small institutions) 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):
       ``(1) Checking and other transaction accounts.
       ``(2) Negotiable order of withdrawal and savings accounts.
       ``(3) Automated teller machine transactions.
       ``(4) Other electronic transactions.
       ``(b) Minimum Survey Requirement.--The annual survey 
     described in subsection (a) shall meet the following minimum 
     requirements:
       ``(1) Checking and other transaction accounts.--Data on 
     checking and transaction accounts shall include, at a 
     minimum, the following:
       ``(A) Monthly and annual fees and minimum balances to avoid 
     such fees.
       ``(B) Minimum opening balances.
       ``(C) Check processing fees.
       ``(D) Check printing fees.
       ``(E) Balance inquiry fees.
       ``(F) Fees imposed for using a teller or other institution 
     employee.
       ``(G) Stop payment order fees.
       ``(H) Nonsufficient fund fees.
       ``(I) Overdraft fees.
       ``(J) Deposit items returned fees.
       ``(K) Availability of no-cost or low-cost accounts for 
     consumers who maintain low balances.
       ``(2) 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:
       ``(A) Monthly and annual fees and minimum balances to avoid 
     such fees.
       ``(B) Minimum opening balances.
       ``(C) Rate at which interest is paid to consumers.
       ``(D) Check processing fees for negotiable order of 
     withdrawal accounts.
       ``(E) Fees imposed for using a teller or other institution 
     employee.
       ``(F) Availability of no-cost or low-cost accounts for 
     consumers who maintain low balances.
       ``(3) Automated teller transactions.--Data on automated 
     teller machine transactions shall include, at a minimum, the 
     following:
       ``(A) Monthly and annual fees.
       ``(B) Card fees.
       ``(C) Fees charged to customers for withdrawals, deposits, 
     and balance inquiries through institution-owned machines.
       ``(D) Fees charged to customers for withdrawals, deposits, 
     and balance inquiries through machines owned by others.
       ``(E) Fees charged to noncustomers for withdrawals, 
     deposits, and balance inquiries through institution-owned 
     machines.
       ``(F) Point-of-sale transaction fees.
       ``(4) Other electronic transactions.--Data on other 
     electronic transactions shall include, at a minimum, the 
     following:
       ``(A) Wire transfer fees.
       ``(B) Fees related to payments made over the Internet or 
     through other electronic means.
       ``(5) Other fees and charges.--Data on any other fees and 
     charges that the Board of Governors of the Federal Reserve 
     System determines to be appropriate to meet the purposes of 
     this section.
       ``(6) Federal reserve board authority.--The Board of 
     Governors of the Federal Reserve System may cease the 
     collection of information with regard to any particular fee 
     or charge specified in this subsection if the Board makes a 
     determination that, on the basis of changing practices in the 
     financial services industry, the collection of such 
     information is no longer necessary to accomplish the purposes 
     of this section.
       ``(c) Annual Report to Congress Required.--
       ``(1) Preparation.--The Board of Governors of the Federal 
     Reserve System shall prepare a report of the results of each 
     survey conducted pursuant to subsections (a) and (b) of this 
     section and section 136(b)(1) of the Consumer Credit 
     Protection Act.
       ``(2) Contents of the report.--In addition to the data 
     required to be collected pursuant to subsections (a) and (b), 
     each report prepared pursuant to paragraph (1) shall include 
     a description of any discernible trend, in the Nation as a 
     whole, in a representative sample of the 50 States (selected 
     with due regard for regional differences), and in each 
     consolidated 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 subsections (a) and (b) (including related 
     fees and minimum balances), that delineates differences 
     between institutions on the basis of the type of institution 
     and the size of the institution, between large and small 
     institutions of the same type, and any engagement of the 
     institution in multistate activity.
       ``(3) Submission to congress.--The Board of Governors of 
     the Federal Reserve System shall submit an annual report to 
     the Congress not later than June 1, 2004, and not later than 
     June 1 of each subsequent year.
       ``(4) Transition provision.--Notwithstanding section 
     4(c)(3) of the Business Checking Freedom Act of 2002, the 
     Board of Governors of the Federal Reserve System shall, on an 
     interim basis, continue to comply with the requirements for 
     the bank fee survey under the amendment made to this section 
     by section 108 of the Riegle-Neal Interstate Banking and 
     Branching Efficiency Act of 1994 for reports submitted to the 
     Congress under this section not later than June 1, 2003, 
     except that the Board shall incorporate within any such 
     report, to the extent possible, any additional information on 
     any credit card fee or charge that is available to the Board 
     even though such information is not required by such 
     amendment.
       ``(d) Definitions.--For purposes of this section, the term 
     ``insured depository institution'' has the meaning given such 
     term in section 3 of the Federal Deposit Insurance Act, and 
     the term ``insured credit union'' has the meaning given such 
     term in section 101 of the Federal Credit Union Act.''.
       (2) Amendment to the truth in lending act.--
       (A) In general.--Paragraph (1) of section 136(b) of the 
     Truth in Lending Act (15 U.S.C. 1646(b)(1)) is amended to 
     read as follows:
       ``(1) Collection required.--The Board shall collect, on a 
     semiannual basis, from a broad sample of financial 
     institutions which offer credit card services, credit card 
     price and availability information including--
       ``(A) the information required to be disclosed under 
     section 127(c) of this chapter;
       ``(B) the average total amount of finance charges paid by 
     consumers; and
       ``(C) the following credit card rates and fees:
       ``(i) Application fees.
       ``(ii) Annual percentage rates for cash advances and 
     balance transfers.
       ``(iii) Maximum annual percentage rate that may be charged 
     when an account is in default.
       ``(iv) Fees for the use of convenience checks.
       ``(v) Fees for balance transfers.
       ``(vi) Fees for foreign currency conversions.''.
       (B) Effective date.--The amendment made by subparagraph (A) 
     shall take effect on January 1, 2003.
       (3) Repeal of sunset provision.--Section 108 of the Riegle-
     Neal Interstate Banking and Branching Efficiency Act of 1994 
     is hereby repealed.
       (4) Nonapplicability of other provision of law.--Section 
     3003(a)(1) of the Federal Reports Elimination and Sunset Act 
     of 1995 (31 U.S.C. 1113 note) shall not apply to any report 
     required to be submitted under section 1002(b) of Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989.
       (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) in each of the fiscal years 2002 
     through 2006.
       ``(B) Allocation by federal reserve board.--Of the total 
     amount required to be paid by the Federal reserve banks under 
     subparagraph (A) for fiscal years 2002 through 2006, the 
     Board of Governors of the Federal Reserve System shall 
     determine the amount each such bank shall pay in such fiscal 
     year.
       ``(C) Replenishment of surplus fund prohibited.--During 
     fiscal years 2002 through

[[Page 4051]]

     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.

       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 service 
     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 subparagraph (1) 
     or (2) or similar in nature to such action,
     shall not be treated as the payment or receipt of interest 
     for purposes of this Act and 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 
Pennsylvania (Mr. Toomey) and the gentleman from Texas (Mr. Gonzalez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Toomey).


                             General Leave

  Mr. TOOMEY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on this legislation and to insert extraneous materials on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. TOOMEY. Mr. Speaker, I yield myself 5 minutes as I rise today in 
support of H.R. 1009, the Business Checking Freedom Act of 2002.
  Let me begin by saying that as a former small business owner, I have 
seen firsthand just how challenging it can be to run and operate a 
small business and the endless headaches that come with playing so many 
roles: making a payroll every Friday, complying with an almost endless 
amount of regulation, paperwork, and taxes.
  It is an unfortunate fact that regulation itself, applied equally to 
large and small entities, is more burdensome to the smaller businesses, 
because they just have fewer resources with which to meet the needs of 
the regulatory environment and to cover the overhead costs. Despite 
these obstacles, many small businesses are thriving.
  What I think we can do here in Congress is ask ourselves, Are there 
ways that we can help these businesses to thrive, help them expand 
their bottom line, help them to hire more workers, become more 
productive, and contribute more to our economy? I think we can do that 
by fostering an environment where the free enterprise market system can 
thrive. Part of that means eliminating unnecessary regulation. That is 
something we can do today.
  It may be hard to believe for many folks, but we actually have a law 
on the books today that prohibits banks from even having the option of 
offering to pay interest on the checking accounts held by businesses 
with those banks. It is actually illegal for a bank in America to pay 
interest to a business that keeps a balance in its checking account.
  Now, this has implications. The inability of depository institutions 
to pay interest on these business checking accounts really hurts all 
sectors of our economy, but the harm is especially pronounced on small 
businesses. Specifically, it means that the small florist shop in 
Pennsburg, Pennsylvania, cannot earn any interest on the hard-earned 
balance that they have to keep in their checking account to pay the 
bills. Over the course of a year or two, that could mean several 
hundred dollars. In time it could mean the difference between making a 
payroll and not making a payroll.
  It means the auto mechanics shop on Northampton Street in Easton, 
Pennsylvania, cannot earn the interest on their hard-earned checking 
account balance, and that could make the difference in investing in the 
latest technology for diagnostic equipment for car repairs.
  Now more than ever, a change in this law would be very helpful to 
businesses as they struggle through this economic slowdown and try to 
get this economy moving again.
  Today, what Congress can do to help is we can pass H.R. 1009, the 
Business Checking Freedom Act of 2002. The bill contains several 
commonsense reforms; but most importantly, it eliminates the ban on the 
payment of interest on business checking accounts that is currently 
imposed on banks after a 2-year transition period. The ban has been in 
effect since the Great Depression. Frankly, it was probably never a 
very good idea, but it is certainly long overdue for appeal now; and 
today is our chance to abolish this ban.
  Support for this bill is nearly universal. The U.S. Chamber of 
Commerce, the NFIB, the America's Community Bankers, the National 
Association of Federal Credit Unions, the Association for Financial 
Professionals, and the Independent Insurance Agents of America are just 
a handful of the independent organizations that support this bill.
  In addition, on March 19 of this year, President Bush announced that 
repealing the prohibition on business interest checking would be 
included as part of his small business legislative plan.
  In addition to the President, the Federal regulators support this 
legislative change as well. In their 1996 joint report, ``Streamlining 
of Regulatory Requirements,'' the Board of Governors of the Federal 
Reserve System, the FDIC, the Office of the Comptroller of the 
Currency, and the Office of Thrift Supervision stated that they believe 
that the 1933 statutory prohibition against payment of interest on 
business checking accounts ``no longer serves a public purpose.''
  There is another important feature that I would like to touch on 
briefly in this bill, and that is that in addition to providing small 
business with much-needed relief, H.R. 1009 would authorize a payment 
of interest on certain reserves that banks are required to maintain at 
the Federal Reserve, the so-called ``sterile reserves.'' Just as it 
makes no sense to prohibit banks from paying interest on business 
checking, it also makes no sense to continue to prohibit the Federal 
Reserve from paying interest to banks on their sterile reserves.
  Federal Reserve Chairman Alan Greenspan has testified before our 
committee, the Committee on Financial Services, that repealing the 
prohibition against paying interest on sterile reserves would have the 
additional benefit of facilitating the Federal Reserve's management of 
U.S. monetary policy. In part because the Fed pays no interest on these 
Reserves, balances at Federal Reserve banks have declined dramatically 
in recent years. The Federal Reserve believes that paying interest on 
these reserves would have the effect of stemming that decline and 
thereby enhancing their ability to conduct monetary policy.
  I would like to thank the gentleman from Ohio (Mr. Oxley), the 
chairman of this committee, and the gentleman from New York (Mr. 
LaFalce), the ranking member, for their strong support of this bill and 
for bringing it to the House floor today. I would also like to thank 
the gentlewoman from New York (Mrs. Kelly) and the gentleman from 
Pennsylvania (Mr. Kanjorski) for their contributions, their support, 
and their leadership on this legislation. I believe this legislation is 
long overdue. I am hopeful that the other Chamber will soon bring it up 
as well. I urge my colleagues to pass this pro-small business, pro-
small bank, pro-free market legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GONZALEZ. Mr. Speaker, I yield myself such time as I may consume.
  I rise in strong support of H.R. 1009. This legislation repeals an 
outdated prohibition against banks paying interest to their business 
customers on

[[Page 4052]]

their checking accounts, and we support it wholeheartedly.
  The repeal of the ban on interest-bearing checking accounts 
represents another important step in the modernization of our financial 
services industry. This 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. 
Federal banking agencies have all concluded that the ban no longer 
serves a useful public purpose and that it is outdated in this modern 
financial services environment.
  Mr. Speaker, H.R. 1009 promotes healthy competition within the 
financial services community for commercial checking accounts, which 
can only benefit the business community, particularly the small 
business community, with more efficient, cost-effective financial 
services.
  Current law and market conditions prevent many small businesses from 
obtaining easy access to interest-bearing checking accounts, while many 
larger businesses and their banks have found a way around the interest 
prohibition through complicated sweep accounts and other devices. This 
legislation would end this discrepancy between small and large 
businesses and, ultimately, increase the efficiency of the Nation's 
economy.

                              {time}  1530

  I do share the concerns of many of my colleagues on the Committee on 
Financial Services that the Federal Reserve sterile reserve interest 
payment provisions of this bill may contribute to the budget deficit. 
But I believe that H.R. 1009, on balance, makes an important and 
necessary contribution to the long-term health of our Nation's economy.
  I would also like to note that this bill includes a Democratic-
sponsored provision that will provide an annual assessment by the 
Federal Reserve of the fees charged retail bank accounts. With fees 
representing an ever-growing share of bank earnings, an annual survey 
of retail bank fees is, in my view, increasingly important.
  Mr. Speaker, I believe H.R. 1009 makes an important contribution to 
improving the financing opportunities for many small businesses across 
the country.
  Mr. Speaker, I urge my colleagues to vote for the bill, and I reserve 
the balance of my time.
  Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to thank the gentleman from Texas (Mr. 
Gonzalez) for his leadership and support of this legislation.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Illinois (Mrs. 
Biggert).
  Mrs. BIGGERT. Mr. Speaker, I want to thank the gentleman from 
Pennsylvania for yielding this time to me, and for agreeing to engage 
in a colloquy on section 7 of the Business Checking Freedom Act of 
2002.
  I also want to thank him for including in this bill section 7, rule 
of construction. This provision addresses the treatment of certain 
services and benefits provided by banks in connection with escrow 
accounts for real estate closing transactions. It makes certain that 
the current legal definition of interest and the existing legal 
treatment of real estate closing escrow transactions remain the same.
  Under current Federal law and regulations, particularly the Federal 
Reserve's regulation Q, banks may provide depositors with services and 
benefits, instead of interest. I originally asked that a similar 
provision be included in H.R. 974 in committee.
  My interest in the issue stems from my experiences handling real 
estate closings early in my legal career and seeing firsthand the 
importance of regulation Q. I am grateful that adjustments are being 
made in the current version, and that the bill is moving forward.
  Section 7 is especially important to title insurance companies, 
agents, and attorneys, who, like other businesses, often receive free 
or lower-cost bank services instead of interest on their real estate 
escrow accounts.
  By not treating such services and benefits as constituting the 
payment of interest, the Federal Reserve ensures a real estate closing 
system that benefits both those who are delivering real estate services 
and those borrowers who receive the ultimate benefits of more 
efficient, lower-cost services.
  In my legal practice, I became very familiar with these types of 
arrangements, and can attest to the fact that they facilitated and made 
more efficient the real estate closing process.
  I strongly support this provision of the bill, and would ask the 
gentleman from Pennsylvania (Mr. Toomey) if he is of the same view 
regarding the intent of this provision.
  Mr. TOOMEY. Mr. Speaker, will the gentlewoman yield?
  Mrs. BIGGERT. I yield to the gentleman from Pennsylvania.
  Mr. TOOMEY. Mr. Speaker, I would tell the gentlewoman, having 
supported this provision since we first considered this bill last year, 
I assure the gentlewoman that I agree with her. This provision 
rightfully preserves the current status of real estate escrow accounts 
held in connection with real estate closing transactions, and 
specifically in services and benefits that banks may provide instead of 
interest on such accounts.
  Mrs. BIGGERT. I thank the gentleman for this clarification, Mr. 
Speaker.
  Mr. GONZALEZ. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. TOOMEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Alabama (Mr. Bachus), chairman of the Subcommittee on 
Financial Institutions and Consumer Credit.
  Mr. BACHUS. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I rise in strong support of H.R. 1009. I first want to 
commend the gentleman from Pennsylvania (Mr. Toomey) for bringing this 
legislation to the floor. This is important legislation.
  Members will recall that the House passed legislation very similar to 
this, which the gentleman from Pennsylvania (Mr. Toomey) sponsored back 
in April of last year. Then, at the end of last year, we passed the 
terrorist insurance legislation. We passed several other important 
pieces of legislation designed to get the economy going, designed to 
eliminate unnecessary regulations, to stimulate growth, to create jobs, 
and to end the recession in our regulations.
  This legislation, like the terrorist insurance legislation that 
President Bush strongly urged the other body to get to work in passing, 
has not been passed by the other body. It is time that we sent this 
legislation out with a strong vote and a strong message to the other 
body to get to work passing this legislation and other important 
legislation.
  This legislation had strong bipartisan support. I want to commend the 
gentleman from Texas (Mr. Gonzalez) and the gentleman from Pennsylvania 
(Mr. Toomey). In speaking on this legislation, they basically have 
already outlined to this House amply why we need this legislation.
  Mr. Speaker, this is critically important to small businesses. Large 
corporations use sweep accounts. They use sophisticated computer 
programs and complex programs to earn interest on their commercial 
deposits. Small business owners do not get those same benefits.
  Money center banks can attract deposits from large corporate 
customers. They promise them, through sweep accounts, that they will be 
compensated for the use of their money. Our small community banks do 
not do this, or it would cost them a great expense to do this.
  This legislation would simply enable the small businesses, whether it 
is a florist, a body shop, an auto body shop, a law firm, a doctor's 
office, a beauty shop, it will allow them to get the same benefits that 
large corporations are getting today.
  It will also allow the small community banks to attract deposits. We 
all know that that is key for the small banks or community banks in 
attracting deposits, keeping those deposits and keeping those monies in 
the local communities.
  Again, I want to commend the gentleman from Pennsylvania (Mr.

[[Page 4053]]

Toomey) and the other party, the minority party, the gentleman from 
Pennsylvania (Mr. Kanjorski) and the gentleman from Texas (Mr. 
Gonzalez).
  Also, finally, I want to commend the gentlewoman from New York (Mrs. 
Kelly) for her work on this bill, and the chairman of the full 
committee, the gentleman from Ohio (Mr. Oxley).
  Mr. TOOMEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from California (Mr. Royce).
  Mr. ROYCE. Mr. Speaker, I thank the gentleman for giving me this 
time, and I rise in strong support of the bill offered by the gentleman 
from Pennsylvania (Mr. Toomey), which is titled H.R. 1009, the Business 
Checking Freedom Act.
  Mr. Speaker, this bill really follows in the footsteps of 
groundbreaking legislation that we already passed in the House of 
Representatives when we repealed outdated Depression era constraints on 
the financial services industry and moved to move that industry into 
the 21st century.
  Giving banks the ability to pay interest on business checking 
accounts has been endorsed by the President as part of his small 
business agenda. The Federal Reserve Board also has long supported 
efforts to allow banks to offer interest on demand accounts, and the 
measure enjoys a broad base of industry support, including support from 
the National Federation of Independent Businesses, from the U.S. 
Chamber of Commerce, from America's Community Bankers, from the 
National Association of Federal Credit Unions, from the Association of 
Financial Professionals, and from the Independent Insurance Agents of 
America.
  The inability of depository institutions to pay interest on business 
accounts hurts all sectors of the economy and decreases the overall 
competitiveness of the American markets. This legislation gives small 
businesses the jumpstart they need to create new jobs and improve the 
economy while removing burdensome regulations from small banks and 
allowing the market to work. I think that is the point that the author, 
the gentleman from Pennsylvania (Mr. Toomey), makes so well.
  Mr. Speaker, I strongly encourage all of my colleagues to support 
this legislation and to strike a victory for the American economy. I 
recognize that many businesses, by the way, maintain what are called 
``now accounts.'' Those that do will not receive this benefit. I hope 
that in the future, as this legislation moves, the restriction on 
interest on corporate now accounts is also repealed.
  Lastly, I just want to thank the gentleman from Pennsylvania (Mr. 
Toomey) for the opportunity to speak in support of his important bill.
  Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I think the case has been made very clearly that it is 
long past time to repeal this really archaic Depression era law that no 
longer serves any useful purpose, if it ever did.
  I urge my colleagues to support this bill.
  Mr. OXLEY. Mr. Speaker, the legislation the House considers today 
represents the Financial Services Committee's continuing efforts to 
modernize America's laws so that they promote economic growth and the 
free market. Today's legislation is but one of many needed reforms to 
ensure that outdated thinking doesn't stifle the competitive forces of 
markets, and the changes made by H.R. 1009 are long overdue.
  Under current law, small businesses are the only entities which must 
leave their capital lying idle in non-interest bearing accounts. The 
Business Checking Freedom Act of 2002 corrects this problem. This 
change is simply common sense, which is why a similar measure sponsored 
by Representative Kelly was passed by this body over a year ago. 
Unfortunately, as has been the case with so many important reforms 
passed by the House this Congress, the other body has refused to take 
up Representative Kelly's bill for consideration. While the other body 
waits, millions of small businesses across America are denied the 
opportunity to earn interest, which they could put towards hiring more 
workers and improving their operations.
  H.R. 1009 is an important reform that will have tangible effects on 
our economy. That's why the President included these reforms in his 
plan for revitalizing small business and entrepreneurship. It is also 
why Federal Reserve Chairman Alan Greenspan supports this bill. By 
passing this legislation today the House will continue to demonstrate 
its leadership in improving our laws to reflect the realities of the 
21st century.
  Mr. Speaker, it is time for the other body to follow our lead. I 
thank Representative Toomey for his outstanding leadership in this 
area. His efforts will help small businessmen and women across America, 
and as Chairman of the Financial Services Committee I am grateful. I 
urge all of my colleagues to support H.R. 1009.
  Mr. TOOMEY. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Walden of Oregon). The question is on 
the motion offered by the gentleman from Pennsylvania (Mr. Toomey) that 
the House suspend the rules and pass the bill, H.R. 1009, 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.
  A motion to reconsider was laid on the table.

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