WASHINGTON - The House is expected to approve two bills this week that banking industry officials are tracking closely.

Lawmakers are scheduled to vote today on legislation that would let banks pay interest on business checking accounts as soon as 2003, temporarily expand sweep accounts, and let the Federal Reserve Board pay interest on bank reserves.

The bill would repeal a prohibition on interest-bearing commercial checking accounts in two years. In the interim, the number of times banks can sweep funds from no-interest commercial checking accounts into interest-bearing ones would quadruple, to 24 times a month.

The measure also would authorize the government to pay interest on required and excess reserves that banks and thrifts deposit with the Fed, let the central bank adjust the level of required reserves, and require the Fed to survey bank and credit union fees annually, including charges on checking accounts, ATM transactions, and credit cards. A legal requirement for a similar Fed survey lapsed last year.

Industry opinion is divided on interest-bearing business checking. Some small banks predict that the new product would help them attract more customers and funds. Other community banks oppose it out of fear that it would drive up the cost of deposits. A few large institutions oppose the move because they have already invested so much in sweep programs.

The House is expected to vote Wednesday on a bill more popular across the banking industry that would phase out the estate tax over 10 years, at a cost to the government of $192.8 billion.

The measure would allow the value of an estate to be "stepped up" - or taxed at the market value at the time the assets are inherited - during the phase-out decade.

After that, the first $1.3 million of an estate's value would be stepped up, which in effect would exempt that portion from capital gains taxes. The legislation would allow a surviving spouse to exempt another $3 million. The remainder of the estate would be taxed based on the original cost of the assets.

Bankers say calculating the original cost would be very difficult, and in some cases impossible, because inherited assets are often purchased many decades earlier.

Meanwhile, industry lobbyists, whose top tax priority of expanding tax-deferred retirement savings accounts is not in the Bush tax package, were encouraged by House Ways and Means Committee Chairman William Thomas' comments last week that he may push for tax relief beyond the President's plan.

Senate Finance Committee Chairman Charles Grassley is expected as early as this week to introduce legislation similar to a bill in the House that would increase contributions to individual retirement accounts and corporate 401(k) plans.

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