To repeal the prohibition on the payment of interest on demand deposits, and for other purposes.

February 13, 2003

Mr. TOOMEY (for himself, Mr. KANJORSKI, Mrs. BIGGERT, Mr. GONZALEZ, Mr. SHAYS, and Ms. HOOLEY of Oregon) introduced the following bill; which was referred to the Committee on Financial Services

To repeal the prohibition on the payment of interest on demand deposits, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Business Checking Freedom Act of 2003'.

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`(i) [Repealed]'.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`(g) [Repealed]'.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 1-year period beginning on the date of the enactment of this Act.

SEC. 3. 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.

END