H.R. 1442 (105th): Federal Reserve Free Enterprise Act

105th Congress, 1997–1998. Text as of Apr 24, 1997 (Introduced).

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HR 1442 IH

105th CONGRESS

1st Session

H. R. 1442

To amend the Federal Reserve Act to expand the opportunity for private enterprise to compete with the Board of Governors of the Federal Reserve System in the provision of check-clearing and other services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

April 24, 1997

Mr. GONZALEZ (for himself and Mrs. MALONEY of New York) introduced the following bill; which was referred to the Committee on Banking and Financial Services


A BILL

To amend the Federal Reserve Act to expand the opportunity for private enterprise to compete with the Board of Governors of the Federal Reserve System in the provision of check-clearing and other services, 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; PURPOSES.

    (a) SHORT TITLE- This Act may be cited as the ‘Federal Reserve Free Enterprise Act’.

    (b) PURPOSES- The purposes of this Act are as follows:

      (1) To facilitate the development of private enterprise and jobs by promoting competition with the Board of Governors of the Federal Reserve System (hereafter in this section referred to as the ‘Board’) in the provision of check-clearing and other services.

      (2) To further promote such competition by having the Board fairly and accurately price the services provided by the Board or any Federal reserve bank.

      (3) To save taxpayer funds by eliminating the subsidy the Board provides through the maintenance of a pricing system for check-clearing and other services which does not fully recover the cost of providing such services.

      (4) To end the practice of the Board of bundling together all the costs and revenue from all check-clearing and other services provided by the Board or any Federal reserve bank and require the Board to price each readily identifiable component of each such service in a way that ensures that the full amount of the costs incurred which are allocable to the provision of such component is fully recovered.

      (5) To stimulate innovation and provide a wider range of check-clearing and other services through market competition and the free flow of information.

SEC. 2. COMPETITIVE PRICING OF SERVICES.

    (a) CLARIFICATION OF FEE SCHEDULE REQUIREMENTS-

      (1) IN GENERAL- Section 11A(b) of the Federal Reserve Act (12 U.S.C. 248a(b)) is amended by striking paragraph (2) and all that follows through paragraph (8) and inserting the following new paragraphs:

      ‘(2) check processing involving sorting and routing paper checks, and settlement services;

      ‘(3) electronic funds transfer services;

      ‘(4) automated clearinghouse services;

      ‘(5) electronic cashletter services;

      ‘(6) securities safekeeping services;

      ‘(7) check image capture services;

      ‘(8) check truncation services;

      ‘(9) image archive warehousing services;

      ‘(10) electronic check presentation services;

      ‘(11) adjustment of incorrect debits or credits services;

      ‘(12) return of ‘bad’ checks services;

      ‘(13) transportation of paper checks services in the clearing process;

      ‘(14) presentation point services;

      ‘(15) payor bank service or controlled disbursements services;

      ‘(16) any other service which the Board offers, directly or through a Federal reserve bank; and

      ‘(17) each readily identifiable component of any service described in a preceding paragraph.’.

      (2) PUBLICATION WITHIN 60 DAYS- Before the end of the 60-day period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall publish a revision of the schedule of fees required under section 11A of the Federal Reserve Act which reflects the changes required in the schedule because of the amendment made by paragraph (1).

    (b) PRICING OF SERVICE COMPONENTS- Section 11A of the Federal Reserve Act (12 U.S.C. 248a) is amended--

      (1) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively: and

      (2) by inserting after subsection (c) the following new subsection:

    ‘(d) PRICING OF SERVICE COMPONENTS-

      ‘(1) REQUEST FOR SEPARATE PRICING OF COMPONENT- If--

        ‘(A) any person seeks to compete with the Board or any Federal reserve bank in the provision of any component of any service referred to in subsection (b); and

        ‘(B) the Board has not provided an explicit price for such component in the fee schedule maintained by the Board under this section,

      such person may submit a description of the service to be provided and a request for a statement of an explicit price for the provision of such component by the Board or bank.

      ‘(2) ACTION ON REQUEST- Except as provided under paragraph (3), the Board shall--

        ‘(A) comply with any request submitted under paragraph (1); and

        ‘(B) include the price in the schedule of fees maintained by the Board before the end of the 60-day period beginning on the date the Board receives such request.

      ‘(3) FRIVOLOUS AND MERITLESS REQUEST- The Board may decline any request under paragraph (1) which the Board determines, in accordance with regulations which the Board shall prescribe, is frivolous and without any merit whatsoever if the Board publishes a notice of the findings and conclusions of the Board with regard to such determination.’.

    (c) DOCUMENTATION- Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:

    ‘(e) REVIEW OF PRICING OF SERVICES PROVIDED BY THE FEDERAL RESERVE SYSTEM-

      ‘(1) IN GENERAL- The Comptroller General shall conduct an annual audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks to determine whether the requirements of subsection (c)(3) of section 11A of the Federal Reserve Act are being met with respect to each component of any service referred to in subsection (b) of such section.

      ‘(2) DOCUMENTATION- Notwithstanding any restriction in this section or any other provision of law relating to the scope of any audit of the Board of Governors of the Federal Reserve System or any Federal reserve bank by the Comptroller General--

        ‘(A) the Board and each Federal reserve bank shall maintain such documents and information as the Comptroller General determines may be useful for purposes of any audit under paragraph (1) for such reasonable period of time as the Comptroller General determines to be appropriate; and

        ‘(B) the Comptroller General shall have full access to such documents for purposes of any audit under paragraph (1).

      ‘(3) REPORT- A report on each audit conducted under paragraph (1) shall be submitted annually to the Congress.’.