Sens. Richard C. Shelby and Connie Mack introduced their regulatory relief bill, but dropped plans to refund more than $2 billion from the Bank Insurance Fund.

The legislation, introduced Friday, instead would let banks pay interest on business checking accounts and let the Federal Reserve Board pay interest on reserve balances.

A draft version of the bill circulated in August would have rebated the $2.1 billion in the bank fund that exceeds the 1.25% required reserve ratio set by Congress. It also would have returned money to the banking industry whenever the fund's reserves climbed above 1.30% of insured deposits.

The two Republican members of the Banking Committee nixed the rebate plan because it would have added to the budget deficit, a spokeswoman for Sen. Shelby said. The bill would roll back more than 50 regulations in order to reduce government burden on banks and thrifts.

Another provision eliminated from the August draft would have excluded home equity loans from the Real Estate Settlement Procedures Act. A controversial provision to drop the Banking Holding Company Act's anti- tying rules was retained.

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