text: 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      ``(i) [Repealed]''.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      ``(g) [Repealed]''.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''.
      (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 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.
  
              Passed the House of Representatives April 9, 2002.
  
              Attest:
  
                                                   JEFF TRANDAHL,
  
                                                                   Clerk.
target: Business Checking Freedom Act of 2002 - Amends the Federal Reserve Act, the Home Owners' Loan Act, and the Federal Deposit Insurance Act to repeal the prohibition against the payment of interest on demand deposits. Makes such repeal effective two years from the date of enactment.(Sec. 3) Authorizes interest-bearing transaction accounts for businesses, permitting up to 24 transfers per month (or any greater number the Federal Reserve Board (Board) may determine) to another account of the owner in the same institution.(Sec. 4) Authorizes the payment of interest by a Federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution.Revises the requirements for the annual survey of bank fees and services by the Board to specify the inclusion of: (1) checking and other transaction accounts; (2) negotiable order of withdrawal and savings accounts; (3) automated teller machine transactions; and (4) other electronic transactions. Establishes minimum survey requirements for each such account or transaction area. Requires such survey to address minimum balance requirements as well as fees.Amends the Truth in Lending Act (and Consumer Credit Protection Act) to revise the requirements for the semiannual survey of credit card price and availability information to specify the inclusion of certain information, including finance charges, annual percentage rates, and various fees.Requires the Board to report annually to Congress on the results of both surveys.Amends the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 to repeal the termination date for and so continue the annual survey by the Board of certain retail banking services (and associated fees) provided by insured depository institutions.(Sec. 5) Amends the Federal Reserve Act to revise the ratio of reserves a depository institution must maintain against its transaction accounts, permitting a ratio of zero.(Sec. 6) Directs the Federal reserve banks in FY 2002 through 2006 to transfer to the Board for transfer to the Secretary of the Treasury, for deposit in the general fund, additional surplus funds equal to the net cost of their interest payments to depository institutions.(Sec. 7) Provides a rule of construction for escrow accounts maintained at a depository institution in connection with a real estate transaction. Declares that the institution's absorption of expenses or forbearance in charging a fee or other benefit should not be treated as the payment or receipt of interest.
feat_title: To repeal the prohibition on the payment of interest on demand deposits.