Monetary Control Act of 1979

Summary

Monetary Control Act of 1979 - Amends the Federal Reserve Act to authorize the Board of Governors of the Federal Reserve System to require specified depository institutions to submit to the Board such periodic financial reports as the Board determines to be necessary for it to control and monitor monetary and credit aggregates. Requires federally-insured banks and other depository institutions to maintain reserves in the Federal Reserve System. Establishes the following categories of deposits for the purpose of determining reserve requirements: (1) "category A deposits" which include the total amounts of demand deposits, savings deposits subject to automatic transfers, and deposits subject to negotiable orders of withdrawal or other similar instruments in: (a) insured banks or banks eligible for insured status under the Federal Deposit Insurance Act; (b) insured institutions or institutions eligible for insured status under the National Housing Act; and (c) insured credit unions or credit unions eligible for insured status under the Federal Credit Union Act; (2) "category B deposits" which include the total amount of time deposits with initial maturities of less than 180 days in insured banks or banks eligible for insured status under the Federal Deposit Insurance Act, excluding savings and mutual savings banks as defined in such Act; (3) "category deposits" which include the total amount of savings deposits, not included in category A, in insured banks or banks eligible for insured status under the Federal Deposit Insurance Act, excluding savings and mutual savings banks as defined in such Act; and (4) "category D deposits" which include time deposits with initial maturities greater than 180 days in insured banks or banks eligible for insured status under the Federal Deposit Insurance Act, excluding savings and mutual savings banks as defined in such Act. Confers authority on the Board to impose or change reserve requirements for the sole purpose of enabling the Board to implement monetary policy. Exempts $50,000,000 of category A deposits and $50,000,000 of the total of category B,C, and D deposits from reserve requirements in the calendar year of the effective date of this Act. Authorizes the Board to adjust such exempted amounts in subsequent years according to a specified formula. Authorizes the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, and the National Credit Union Administration to exempt any depository institution under their authority from reserve requirements if the net deposits of such institution are not expected to exceed the exempted amount between the last date on which such exemption is authorized to be made and the commencement of the next calendar year. Confers a similar authority upon the Board in the case of all other depository institutions. Requires non-exempt depository institutions to maintain reserves against their category A deposits at the rate of nine and one-half percent or at a rate between eight and ten percent as prescribed by the Board. Requires reserves against category B deposits at the rate of eight percent or at a rate between three and eight percent as prescribed by the Board. Requires reserves against category C and D deposits at the rate of three percent or at a rate between one and three percent as prescribed by the Board. States that foreign branches or subsidiaries of nonmember banks shall maintain reserves to the same extent required of foreign branches and subsidiaries of member banks. Authorizes the Board to establish additional reserve requirements for: (1) net balances owed by domestic offices of banks in the United States to foreign offices or banks; (2) loans to United States residents made by overseas offices of banks with offices in the United States; and (3) assets held by foreign offices of bank in the United States which were acquired from its domestic offices. Authorizes the imposition of reserve requirements exceeding the limits imposed by this Act for 30-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. Grants certain privileges of member banks of the Federal Reserve System to non-member banks maintaining reserves required by this Act. Provides a four year transition period for nonmember banks to implement the reserve requirements imposed by this Act. Extends a similar transition period to member banks in meeting requirements that exceed those in effect immediately prior to August 1, 1978. Requires the Board to implement the reserve requirements imposed by this Act for member banks within two years. 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 identical for all banks. Permits reserve balances to be maintained by a nonmember bank in member or nonmember banks that maintain reserve balances at a Federal Reserve bank, provided such banks pass the balances to a Federal Reserve bank. Exempts such funds from reserve requirements and Federal Deposit Insurance assessments. Repeals the requirement that time or demand notes, and time notes secured by mortgages on one to four-family residences, carry interest at certain rates in relation to the discount rate in order for a Federal Reserve bank to make advance on such notes. Directs the Board to prepare and publish a schedule of fees for its services and a set of pricing principles by July 1, 1979.

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Documents

3 official files

• Passed House amended

  summary · EN · 20 July 1979

  Open at official source

• Reported to House with amendment(s)

  summary · EN · 11 June 1979

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• Introduced in House

  summary · EN · 15 January 1979

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