Bill summaries are authored by CRS.

Shown Here:
Conference report filed in House (03/21/1980)

(Conference report filed in House, H. Rept. 96-842)

Depository Institutions Deregulation and Monetary Control Act of 1980 - =Title I: Monetary Control Act of 1980= - Amends the Federal Reserve Act to authorize the Board of Governors of the Federal Reserve System to require all Federal and State banks, thrift institutions, and credit unions to submit such periodic financial reports as the Board determines to be necessary for it to control monetary and credit aggregates.

Requires all depository institutions to maintain reserves in the Federal Reserve System. Imposes a three percent reserve ratio on the first $25,000,000 of an institution's total transaction accounts (any account upon which withdrawals may be made by an instrument, payment order, telephone, automatic transfers from savings, share draft or other means determined by regulation of the Board). Requires reserves to be maintained against an institution's total transaction accounts over $25,000,000 in the ratio of 12 percent or at a ratio between eight and 14 percent prescribed by the Board. Adjusts the base level figure of $25,000,000 each year according to the change in total transaction accounts held by all depository institutions. Imposes a three percent reserve requirement on all time deposits in which any interest is held by a depositor who is not a natural person. Authorizes the Board to adjust the reserve ratio on nonpersonal time deposits between zero and nine percent solely for the purpose of implementing monetary policy.

Directs that reserve requirements be uniformly applied to all depository institutions. Permits reserve requirements on nonpersonal time deposits to vary according to their maturities.

Authorizes the imposition of reserve requirements, with respect to liabilities of such institutions, exceeding the limits as to ratios and types of liabilities imposed by this Act for 180-day periods upon a finding that extraordinary circumstances require such action by at least five members of the Board after consultation with the appropriate committees of Congress.

Empowers the Board to impose a supplemental reserve requirement on all transaction accounts in a ratio of up to four percent for the sole purpose of conducting monetary policy. Requires the Board to consult with the Board of Directors of the Federal Deposit Insurance Corporation, the Federal Home Loan Bank Board, and the National Credit Union Administration Board before imposing supplemental reserve requirements. Requires the Board to promptly report and justify to the Congress any exercise of such authority. Requires interest to be paid on supplemental reserves at a rate up to the average rate earned on the securities portfolio of the Federal Reserve System. Requires annual reports to the Congress on the need for continued maintenance of supplemental reserves if they should be required for more than one year. Prohibits supplemental reserve requirements from being imposed or continued if the amount of reserves being held within the System is less than the amount which would be held if the initial reserve requirements, established by this Act, were in effect.

States that foreign branches, subsidiaries, and international banking facilities of nonmember depository institutions shall maintain reserves to the same extent required of foreign branches, subsidiaries, and international banking facilities of member banks. Authorizes the Board to establish additional reserve requirements for: (1) net balances owed by domestic offices of such institutions in the United States to any related or unrelated foreign office; (2) loans to U.S. residents made by overseas offices of such institutions with offices in the United States; and (3) assets held by foreign offices of such institutions in the United States which were acquired from their domestic offices.

States that the reserve requirements imposed by this Act shall not apply to deposits payable outside the United States. Specifies that such limitation shall not affect the Board's authority under other provisions of law.

Entitles any depository institution holding transaction accounts or nonpersonal time deposits to the same discount and borrowing privileges as member banks. Requires the Board and the Federal Reserve banks to take into consideration the special needs of savings and other depository institutions for access to discount and borrowing facilities consistent with their long-term portfolios and sensitivity to trends in the national money markets.

Phases in the reserve requirements of this Act over eight years with respect to nonmember depository institutions and over four years with respect to member banks. Provides no transition period for reserves on any type of deposit or account which was not authorized by Federal law before April 1, 1980. Requires any bank which was a member of the Federal Reserve System on July 1, 1979, to maintain the reserves required of a member bank. Provides an extended transition period to any State nonmember depository institution whose principal office has remained outside the continental United States since August 1, 1978.

Exempts from reserve requirements any institution which: (1) is organized solely to do business with other financial institutions; (2) is owned primarily by such institutions; and (3) does no business with the general public.

Requires the Board to waive the reserve requirement imposed on an institution if the Federal supervisory authority with jurisdiction over such institution has requested such action and has waived its liquidity requirements.

Requires that reserves be maintained in the form of balances at a Federal Reserve bank or as vault cash as determined by regulation or order of the Board, provided such requirements are uniform for all depository institutions. Allows vault cash to be used to satisfy any supplemental reserve requirements. Stipulates that amounts so used shall not earn interest. Permits nonmember depository institutions to maintain their required reserve balances at another depository institution, Federal Home Loan Bank, or in the National Credit Union Central Liquidity Facility provided such balances are passed through to a Federal Reserve Bank. Exempts such funds from reserve requirements and Federal Deposit Insurance assessments. Permits required reserve balances to be used to satisfy any liquidity requirement imposed by State or Federal law.

Expands the types of assets a Federal Reserve Bank may use to collateralize Federal Reserve notes. States that collateral shall not be required for notes held in the vaults of Federal Reserve Banks.

Authorizes any Federal Reserve Bank to buy and sell short-term obligations fully guaranteed as to principal and interest by a foreign government or agency.

Restricts the amount of deposits which a member bank may maintain at a depository institution which is not entitled to Federal Reserve advances (under existing law, deposits in State nonmember banks are restricted).

Repeals the requirement that a time or demand note with a maturity of less than four months must bear interest at one-half percent below the discount rate in order for a Federal Reserve bank to make an advance on the note to a member bank.

Directs the Board to publish a schedule of fees for Federal Reserve bank services and a set of pricing principles within six months of the enactment of this Act.

=Title II: Depository Institutions Deregulation= - Depository Institutions Deregulation Act of 1980 - Establishes a Depository Institutions Deregulation Committee composed of the Board of Governors of the Federal Reserve System, the Chairman of the Board of Directors of the Federal Deposit Insurance Corporation, the Chairman of the Federal Home Loan Bank Board, and the Chairman of the National Credit Union Administration Board, with the Comptroller of the Currency serving as a nonvoting member. Transfers the authority to set maximum interest rates and dividends on the deposits and accounts of depository institutions (Regulation Q) to the Committee. Directs the Committee to phase-out such controls as rapidly as economic conditions warrant. Sets forth targets to be considered by the Committee in phasing out controls.

Requires the Committee to submit annual reports to the Congress on the economic viability of all depository institutions including assessments on: (1) the need for an interest rate differential between banks and thrifts; (2) methods to encourage savings, particularly to ensure funds in the housing market; (3) disintermediation as a result of money market funds; and (4) legislative and administrative recommendations.

Terminates all authority to set maximum interest rates and dividends on deposits and provides for the expiration of the Committee six years after enactment of this Act.

=Title III: Consumer Checking Account Equity Act of 1980= - Consumer Checking Account Equity Act of 1980 - Amends the Federal Reserve Act and the Federal Deposit Insurance Act to authorize member banks in the Federal Reserve System and federally insured nonmember banks to make automatic funds transfers from a saving deposit to a demand deposit pursuant to the written authorization of the depositor to make such transfers in connection with checks or drafts drawn upon the bank.

Authorizes federally insured banks and savings and loan associations, State banks and savings and loan associations, savings banks, and mutual savings banks to offer interest-bearing deposits or accounts upon which the depositor may make withdrawals by negotiable instrument for the purpose of making transfers to third parties (NOW accounts). Stipulates that such deposits or accounts may only be held by individuals or nonprofit organizations.

Amends the Home Owners' Loan Act of 1933 to permit Federal savings and loan associations and Federal mutual savings banks to establish remote service units pursuant to regulations of the Federal Home Loan Bank Board.

Amends the Federal Credit Union Act to permit insured credit unions to offer share draft deposits to individuals and nonprofit organizations in accordance with regulations prescribed by the National Credit Union Administration Board.

Amends the Federal Deposit Insurance Act, the National Housing Act and the Federal Credit Union Act to increase Federal deposit insurance from $40,000 to $100,000 per account. Amends the authority of the Federal Deposit Insurance Corporation with respect to assessments.

Authorizes Federal credit unions to make loans on individual cooperative housing units. Increases the maximum interest rate on credit union loans to members to 15 percent per year inclusive of all finance charges. Empowers the National Credit Union Administration Board to increase the 15 percent maximum rate for a single, 18-month period if money market interest rates have risen over the preceding six months, and disintermediation threatening credit unions has occurred. Requires the Board to consult with the appropriate committees of the Congress, the Department of the Treasury, and the other Federal agencies regulating financial institutions before exercising such authority. Authorizes the Board to establish a higher interest rate ceiling for agent members of the Central Liquidity Facility.

Sets forth provisions for the processing and settlement of NOW account drafts and share drafts.

Permits any person who had an account at the Alaska USA Federal Credit Union, prior to the termination date of its charter, to remain a member for two years notwithstanding such termination date.

=Title IV: Powers of Thrift Institutions and Miscellaneous Provisions= - Expands the investment powers of Federal savings and loan associations including a grant of authority to invest up to 20 percent of an association's assets in consumer loans, commercial paper, and corporate debt securities. Authorizes Federal savings and loan associations to offer credit card services. Grants trust and fiduciary powers to such associations upon approval of the Federal Home Loan Bank Board.

Permits any State savings and loan institution to convert to a Federal stock charter if it has existed in stock form for at least four years.

Permits shares in a registered open-end management investment company to be used to satisfy liquidity requirements for members of the Federal Home Loan Bank System.

Directs the President to convene an interagency task force to provide recommendations to the Congress within 90 days on the problems with the portfolio structure of thrift institutions. Authorizes Federal savings and loan associations to issue mutual capital certificates under the regulation of the Federal Home Loan Bank Board. Provides that such certificates, if properly subordinated, shall be deemed insurance reserves. Prohibits payment of dividends on such certificates unless Federal insurance and net worth requirements have been satisfied.

Authorizes Federal mutual savings banks to hold up to five percent of their assets in commercial, corporate, and business loans, provided such loans are made within the state in which the bank is located or within 75 miles of its home office.

Authorizes the Federal Savings and Loan Insurance Corporation to set insurance reserve requirements within a range of three to six percent as determined by the Federal Home Loan Bank Board.

=Title V: State Usury Laws= - Preempts State usury laws as they apply to first mortgage loans secured by residential real property, cooperative stock, or a manufactured home. Preempts such laws as they apply to the deposits, accounts, or any other obligations of a federally insured bank located outside of Puerto Rico, mutual savings bank, savings bank, insured credit union, member bank in the Federal Home Loan Bank System, or insured savings and loan institution.

Authorizes a State to override such preemption relating to mortgages by law or referendum within three years of the enactment of this Act. Permits a State to regulate discount points and other charges on mortgage loans.

Requires a loan on a manufactured home to comply with consumer protection regulations of the Federal Home Loan Bank Board for such preemption to be effective. Requires such regulations to include provisions relating to balloon payments, prepayment, foreclosure notification, and other charges and fees.

Preempts for three years State usury laws applicable to business and agricultural loans in excess of $25,000. Establishes an interest rate ceiling for such loans at 5 percent in excess of the Federal Reserve discount rate. Authorizes a State to override such preemption by law or referendum.

Preempts State usury laws with respect to any loan made by a State chartered, federally insured bank, insured savings and loan institution or insured credit union. Establishes an interest rate ceiling on such loans at one percent above the discount rate. Amends the Small Business Investment Act of 1958 to preempt certain State usury laws applicable to loans made by a small business investment company. Specifies the maximum rate of interest to be charged on such loans. Authorizes a State by law or referendum to override such preemption at any time.

=Title VI: Truth in Lending Simplification= - Truth in Lending Simplification and Reform Act - Amends the Truth in Lending Act to eliminate: (1) credit transactions for agricultural purposes; and (2) mobile home purchases costing less than $25,000 from coverage under such Act.

Directs the Board of Governors of the Federal Reserve System to issue model forms and clauses, for use in common transactions, describing the transaction in understandable language. Exempts creditors who use such forms from liability under such Act.

Establishes guidelines for restitution by enforcement agencies which discover understatement by creditors of annual percentage rates or finance charges.

Revises disclosure requirements for "open-end" and "closed-end" transactions.

Entitles any person whose principal residence is a mobile home to rescind any transaction which would result in a lien on such residence, within three days after purchase or the time of receiving notice of his right to do so, whichever is later. Makes other changes to the right of rescission of consumers.

Sets forth the liability of creditors and assignees for failures to disclose or inaccurate disclosure of information required by such Act.

Revises provisions relating to the liability of a credit card holder for the unauthorized use of a credit card.

Requires the Board to publish annual percentage rates charged by all creditors in specified standard metropolitan statistical areas.

Reduces disclosure requirements for credit advertising.

Requires a creditor to make a good faith effort to refund a consumer's credit balance if it remains in the account for more than six months.

Exempts any creditor participating in a credit program administered, insured, or guaranteed by any agency of the United States from civil or criminal penalties under this Act where the violation results from the use of an instrument required by such agency.

Requires creditors to respond to oral inquiries about the cost of credit only in terms of annual percentage rates unless the finance charge consists primarily of simple interest.

Specifies the violations which constitute the grounds for maintenance of a civil action against an assignee of a creditor for violation of provisions regulating consumer leasing.

=Title VII: Amendments to the National Banking Laws= - Amends the National Banking laws to: (1) enable national banks and bank holding companies to extend the period of time within which they must dispose of real estate they have acquired; (2) remove the interest rate ceiling on preferred stock issued by national banks; (3) empower the Comptroller of the Currency to revoke the trust powers of a national bank after a hearing; (4) authorize the Comptroller to declare bank holidays during emergencies; (5) provide that the representative of dissenting shareholders in acquisitions by national banks need only be elected by a majority of the dissenting shareholders in forming the committee which will value their shares; (6) authorize the Comptroller to delegate any power vested in the office by law; (7) grant the Comptroller power to issue rules governing unsafe or unsound banking practices where such authority has not been given to other agencies provided otherwise impermissible activities, particularly securities activities, are not authorized by the Comptroller for national banks; (8) authorize the Comptroller to examine any national bank as often as deemed necessary and to examine foreign operations of State member banks; (9) permit the qualifying shares of a director in a national bank to consist of holding company shares; (10) authorize national banks to invest ten percent of their capital and surplus in banks owned exclusively by other banks and formed for the purpose of servicing such banks; and (11) prohibit the establishment, operation, or acquisition of a trust company across state lines until October 1, 1981, unless the company was in operation before March 5, 1980.

Prohibits the Board of Governors of the Federal Reserve System from denying an application for the formation of a one-bank holding company solely because the repayment period for a bank stock loan exceeds 12 years. Requires the Board to consider transactions involving bank stock loans of a period of 12 years or more on a case by case basis.

Directs the Comptroller of the Currency to disburse the liquidating dividends from national banks closed on or before January 22, 1934, held by the Comptroller in his capacity as successor to receivers of those banks.

=Title VIII: Regulatory Simplification= - Financial Regulation Simplification Act of 1980 - Directs the Board of Governors of the Federal Reserve System, the Board of Directors of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Federal Home Loan Bank Board and the National Credit Union Administration to periodically review and revise their regulations to assure that, to the maximum extent practicable, such regulations: (1) are necessary and clearly written; (2) have been adopted in a manner which gives opportunity for public participation and comment and the consideration of alternatives; (3) minimize compliance costs and other burdens to financial institutions and the public; and (4) avoid duplication and inconsistencies.

Directs such Federal agencies to submit reports on the implementation of this title to the Banking Committees of the House of Representatives and the Senate.

Terminates this title five years after its effective date.

=Title IX: Foreign Control of United States Financial Institutions= - Prohibits the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board from approving, before July 1, 1980, any application relating to the acquisition by a foreign entity of five percent or more of the stock or assets of a domestic bank, mutual savings bank, or savings and loan association. Exempts: (1) takeovers necessary to prevent bankruptcy or insolvency of the domestic institution; (2) applications filed before March 5, 1980; (3) takeovers of domestic institutions with less than $100,000,000 in deposit; (4) acquisitions of shares or assets in connection with intrafirm reorganizations; (5) takeovers of institutions already controlled by a foreign entity; and (6) applications relating to subsidiaries of a holding company under an order to divest by December 31, 1980.