[House Report 108-439]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-439
======================================================================
PROVIDING FOR CONSIDERATION OF H.R. 1375, FINANCIAL SERVICES REGULATORY
RELIEF ACT OF 2003
_______
March 17, 2004.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Sessions, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 566]
The Committee on Rules, having had under consideration
House Resolution 566, by a nonrecord vote, report the same to
the House with the recommendation that the resolution be
adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for the consideration of H.R. 1375,
the Financial Services Regulatory Relief Act of 2003, under a
structured rule. The rule provides one hour of general debate
equally divided and controlled by the chairman and ranking
minority member of the Committee on Financial Services. The
rule waives all points of order against consideration of the
bill (except those arising under provisions of the
Congressional Budget Act of 1974 other than section 302(f),
prohibiting consideration of legislation providing new budget
authority in excess of a committee's 302(a) allocation of such
authority).
The rule provides that the amendment in the nature of a
substitute recommended by the Committee on Financial Services
and the Committee on the Judiciary now printed in the bill
shall be considered as an original bill for the purpose of
amendment, and shall be considered as read. The rule waives all
points of order against the committee amendment in the nature
of a substitute (except those arising under provisions of the
Congressional Budget Act of 1974 other than section 302(f),
prohibiting consideration of legislation providing new budget
authority in excess of a committee's 302(a) allocation of such
authority).
The rule makes in order only those amendments printed in
this report accompanying the resolution. The rule provides that
the amendments printed in this report may be considered only in
the order printed in this report, may be offered only by a
Member designated in this report, shall be considered as read,
shall be debatable for the time specified in this report
equally divided and controlled by the proponent and an
opponent, shall not be subject to amendment, and shall not be
subject to a demand for a division of the question in the House
or in the Committee of the Whole. The rule waives all points of
order against the amendments printed in this report.
Finally, the rule provides one motion to recommit with or
without instructions.
SUMMARY OF AMENDMENTS MADE IN ORDER
(Summaries of amendments derived from information provided
by the sponsor.)
1. Oxley: Manager's Amendment. (1) Limits de novo branching
for ILCs to those whose business is more than 85% financial in
nature and, in the case of ILCs whose business is less than 85%
financial in nature, limits branching to those ILCs who had
Federal deposit insurance before October 1, 2003; (2) Makes
technical revisions to section 303 requested by the NCUA; (3)
Makes technical revisions to section 213 requested by OTS; (4)
Strikes section 107; (5) Strikes section 214; (6) Strikes
section 613; and (7) Makes technical changes to section 405
requested by the SEC. (20 Minutes)
2. Waters: Strikes section 609 of the bill. Section 609
reduces the minimum waiting period from 15 calendar days to 5
calendar days for banks and bank holding companies to merge
with or acquire other banks or bank holding companies after the
Department of Justice has approved a bank merger. The amendment
preserves the existing 15 calendar day waiting period. (10
minutes)
3. Bachus: Strikes section 614 relating to the liability
standards applied to third-party independent contractors
working for a bank. (10 minutes)
4. Weiner: Prohibits commercial banks from charging a fee
to the depositor of a check that is returned for insufficient
funds. (10 minutes)
5. Jackson-Lee: Expressing the sense of Congress that in
situations where a requesting agency obtains expedited action
to approve a merger transaction application between multiple
depository institutions, that careful consideration is placed
on the impact that the transaction will have on affected
communities and customers of any or all of the applicant
institutions. (10 minutes)
6. Kelly/Toomey: Adds new title at the end of the bill
which removes the prohibition on banks from paying interest on
business checking accounts and would allow the Federal Reserve
to pay interest on so-called ``sterile'' reserves. The language
of the amendment is similar to the text of H.R. 758, the
Business Checking Freedom Act, which passed the House in April
of 2003, by voice vote. (10 minutes)
TEXT OF AMENDMENTS MADE IN ORDER
1. An Amendment To Be Offered by Representative Oxley of Ohio, or His
Designee, Debatable for 20 Minutes
Page 9, strike line 3 and all that follows through page 10,
line 2 (and redesignate subsequent sections and any cross
reference to any such section and conform the table of contents
accordingly).
Page 31, line 2, strike ``main'' and insert ``home''.
Page 31, strike line 3 and all that follows through page 32,
line 13 (and conform the table of contents accordingly).
Page 37, strike lines 16 and 17 and insert the following new
heading:
``(b) Additional Investment Authority.--
Page 37, line 18, strike ``A Federal'' and insert ``In
addition to any investments otherwise authorized, a Federal''.
Page 47, after line 5, insert the following new paragraphs
(and redesignate the subsequent paragraph accordingly):
(2) Interstate branching by subsidiaries of
commercial firms prohibited.--Section 18(d)(3)) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(d)(3)) is
amended by adding at the end the following new
subparagraph:
``(C) Interstate branching by subsidiaries of
commercial firms prohibited.--
``(i) In general.--If the appropriate
State bank supervisor of the home State
of any industrial loan company,
industrial bank, or other institution
described in section 2(c)(2)(H) of the
Bank Holding Company Act of 1956, or
the appropriate State bank supervisor
of any host State with respect to such
company, bank, or institution,
determines that such company, bank, or
institution is controlled, directly or
indirectly, by a commercial firm, such
company, bank, or institution may not
acquire, establish, or operate a branch
in such host State.
``(ii) Commercial firm defined.--For
purposes of this subsection, the term
`commercial firm' means any entity at
least 15 percent of the annual gross
revenues of which on a consolidated
basis, including all affiliates of the
entity, were derived from engaging, on
an on-going basis, in activities that
are not financial in nature or
incidental to a financial activity
during at least 3 of the prior 4
calendar quarters.
``(iii) Grandfathered institutions.--
Clause (i) shall not apply with respect
to any industrial loan company,
industrial bank, or other institution
described in section 2(c)(2)(H) of the
Bank Holding Company Act of 1956--
``(I) which became an insured
depository institution before
October 1, 2003 or pursuant to
an application for deposit
insurance which was approved by
the Corporation before such
date; and
``(II) with respect to which
there is no change in control,
directly or indirectly, of the
company, bank, or institution
after September 30, 2003, that
requires an application under
subsection (c), section 7(j),
section 3 of the Bank Holding
Company Act of 1956, or section
10 of the Home Owners' Loan
Act.
``(iv) Transition provision.--Any
divestiture required under this
subparagraph of a branch in a host
State shall be completed as quickly as
is reasonably possible.
``(v) Corporate reorganizations
permitted.--The acquisition of direct
or indirect control of the company,
bank, or institution referred to in
clause (iii)(II) shall not be treated
as a `change in control' for purposes
of such clause if the company acquiring
control is itself directly or
indirectly controlled by a company that
was an affiliate of such company, bank,
or institution on the date referred to
in clause (iii)(II), and remained an
affiliate at all times after such
date.''.
(3) Technical and conforming amendments.--Section
18(d)(4) of the Federal Deposit Insurance Act (12
U.S.C. 1828(d)(4)) is amended--
(A) in subparagraph (A) by striking ``Subject
to subparagraph (B)'' and inserting ``Subject
to subparagraph (B) and paragraph (3)(C)''; and
(B) in subparagraphs (D) and (E), by striking
``The term'' and inserting ``For purposes of
this subsection, the term''.
Page 47, line 21, insert ``or are applicable to an insured
State nonmember bank under section 18(d)(3) of the Federal
Deposit Insurance Act'' after ``Revised Statutes of the United
States''.
Page 51, line 4, insert before the semicolon at the end ``and
inserting the following new paragraph''.
Page 51, after line 4, insert the following new paragraph:
``(5) Applicability to industrial loan companies.--No
provision of this section shall be construed as
authorizing the approval of any transaction involving a
industrial loan company, industrial bank, or other
institution described in section 2(c)(2)(H) of the Bank
Holding Company Act of 1956, or the acquisition,
establishment, or operation of a branch by any such
company, bank, or institution, that is not allowed
under section 18(d)(3).''.
Page 58, line 19, insert ``(i)'' after ``section
38(e)(2)(E)''.
Page 88, strike line 1 and all that follows through the 2
items following line 15 on page 94 (and redesignate subsequent
sections and any cross reference to any such section and
conform the table of contents accordingly).
----------
2. An Amendment To Be Offered by Representative Waters of California,
or Her Designee, Debatable for 10 Minutes
Page 84, strike line 1 and all that follows through line 13
(and redesignate subsequent sections and any cross reference to
any such section and conform the table of contents
accordingly).
----------
3. An Amendment To Be Offered by Representative Bachus of Alabama, or
His Designee, Debatable for 10 Minutes
Page 94, strike line 16 and all that follows through line 20
(and redesignate subsequent sections and any cross reference to
any such section and conform the table of contents
accordingly).
----------
4. An Amendment To Be Offered by Representative Weiner of New York, or
His Designee, Debatable for 10 Minutes
Page 67, after line 13, insert the following new section (and
conform the table of contents accordingly):
SEC. 410. CERTAIN CHECK DISHONORMENT FEES PROHIBITED.
(a) In General.--Section 607 of the Expedited Funds
Availability Act (12 U.S.C. 4006) (relating to miscellaneous
provisions) is amended by adding at the end the following new
subsection:
``(f) Fees on Dishonored Checks.--
``(1) Receiving depository institution.--In the case
of a check drawn on an account at an originating
institution which is dishonored by the originating
institution due to the lack of sufficient funds in such
account to pay the check, a receiving depository
institution may not impose any fee on the depositor, in
connection with such check, due to such dishonorment.
``(2) Rule of construction.--No provision of this
section shall be construed as affecting any intervening
depository institution or the costs of the services
provided by such depository institution.''.
(b) Effective Date.--The amendment made by this section shall
apply after the end of the 180-day period beginning on the date
of the enactment of this Act.
----------
5. An Amendment To Be Offered by Representative Jackson-Lee of Texas,
or Her Designee, Debatable for 10 Minutes
Page 83, line 4, strike the closing quotation marks and the
2nd period.
Page 83, after line 4, insert the following new subparagraph:
``(C) Sense of the congress.--It is the sense
of the Congress that, when a requesting agency
requires expeditious action on an application
for a merger transaction, consideration should
be made as to the impact the merger transaction
will have on corporate and individual customers
in an effort to ensure that no harmful effects
will result from the merger transaction.''.
----------
6. An Amendment To Be Offered by Representative Kelly of New York, or
Her Designee, Debatable for 10 Minutes
Page 108, after line 14, insert the following new title (and
redesignate the subsequent title and sections and conform the
table of contents accordingly):
TITLE VII--BUSINESS CHECKING FREEDOM
SEC. 701. SHORT TITLE.
This title may be cited as the ``Business Checking Freedom
Act of 2004''.
SEC. 702. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED FOR ALL
BUSINESSES.
(a) 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.''.
(b) Effective at the end of the 2-year period beginning on
the date of the enactment of this Act, section 2 of Public Law
93-100 (12 U.S.C. 1832) is amended--
(1) in subsection (a)(1), by striking ``but subject
to paragraph (2)'';
(2) by striking paragraph (2) of subsection (a) and
inserting the following new paragraph:
``(2) No provision of this section may be construed
as conferring the authority to offer demand deposit
accounts to any institution that is prohibited by law
from offering demand deposit accounts.''; and
(3) in subsection (b) (as added by subsection (a) of
this section) by striking ``and is not a deposit or
account described in subsection (a)(2)''.
SEC. 703. 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. 704. 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.--The Federal Reserve Act (12 U.S.C.
221 et seq.) is amended--
(A) by redesignating sections 30 and 31 as
sections 31 and 32, respectively; and
(B) by inserting after section 29 the
following new section:
``SEC. 30. 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, 2005, and
not later than June 1 of each subsequent year.
``(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) Conforming amendment.--
(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, 2004.
(3) Repeal of other report provisions.--Section 1002
of Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 and section 108 of the Riegle-
Neal Interstate Banking and Branching Efficiency Act of
1994 are hereby repealed.
(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. 705. 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. 706. 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 2003 through 2007.--
``(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 2003 through 2007.
``(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 2003 through 2007, 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 2003 through
2007, 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 2003
through 2007, 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. 707. 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,
provided, however, that nothing herein shall be construed so as
to require a depository institution that maintains an escrow
account in connection with a real estate transaction to pay
interest on such escrow account or to prohibit such institution
from paying interest on such escrow account. Nor shall anything
herein be construed to preempt the provisions of law of any
State dealing with the payment of interest on escrow accounts
maintained in connection with real estate transactions.