National Emergency Employment Defense Act of 2011 - Replaces Federal Reserve notes with United States Money.
Instructs the Secretary of the Treasury to originate United States Money to address any negative fund balances resulting from a shortfall in available government receipts to fund government appropriations.
Subjects to criminal and civil penalties any person who creates or originates United States Money by lending against deposits through "fractional reserve banking."
Prohibits borrowing by the Secretary or by any federal agency or department, independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, federal savings association, or federal credit union) from any source other than the Secretary.
Requires the Secretary to begin to retire all outstanding instruments of U.S. indebtedness by payment in full of the amount legally due the bearer in United States Money.
Prescribes requirements for the entry of United States Money into circulation.
Directs the Secretary to purchase all net assets in the Federal Reserve System, including the Federal reserve banks. Requires return to any member bank in the form of United States Money of any reserves held by any Federal reserve bank.
Establishes: (1) the Monetary Authority to establish monetary supply policy and monitor the nation's monetary status, (2) the Bureau of the Federal Reserve to administer the origination and entry into circulation of United States Money, (3) the Emergency Board to recommend to Congress when a national emergency requires the President to issue a certification of emergency for the exercise of authority by the Monetary Authority as lender of last resort, and (4) a revolving loan fund in the Treasury for relending to banking institutions.
Sets forth a conversion process to replace fractional reserve banking with the lending of United States Money.
Sets a ceiling on interest rates.
Requires the Monetary Authority to instruct the Secretary to disperse monetary grants to states for public infrastructure, education, health care and rehabilitation, pensions, and paying for unfunded federal mandates.
Directs the Secretary to make recommendations to Congress for payment of a tax-free Citizens Dividend to all U.S. citizens residing in the United States in order to provide liquidity to the banking system at the commencement of this Act, before governmental infrastructure expenditures have had a chance to work into circulation.
Prescribes requirements for federal funding of education programs, coverage of any deficits in Social Security Trust Fund account, a universal health care plan, resolution of aspects of the mortgage crisis, and a program of interest-free lending of United States Money to state and local governmental entities.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2990 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2990
To create a full employment economy as a matter of national economic
defense; to provide for public investment in capital infrastructure; to
provide for reducing the cost of public investment; to retire public
debt; to stabilize the Social Security retirement system; to restore
the authority of Congress to create and regulate money, modernize and
provide stability for the monetary system of the United States; and for
other public purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 21, 2011
Mr. Kucinich (for himself and Mr. Conyers) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To create a full employment economy as a matter of national economic
defense; to provide for public investment in capital infrastructure; to
provide for reducing the cost of public investment; to retire public
debt; to stabilize the Social Security retirement system; to restore
the authority of Congress to create and regulate money, modernize and
provide stability for the monetary system of the United States; and for
other public purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``National Emergency Employment
Defense Act of 2011''.
SEC. 2. FINDINGS; PURPOSES.
(a) Findings.--The Congress finds as follows:
(1) Nearly 14,000,000 Americans are currently unemployed,
another 12,000,000 estimated Americans are underemployed, wages
are stagnant and millions of Americans are being asked to take
pay cuts.
(2) Over 43,000,000 Americans live below the poverty line,
49,000,000 of Americans go to bed hungry at night, and an
estimated 3,000,000 Americans are homeless.
(3) Over 1,500,000 non-business bankruptcies were filed in
calendar year 2010, the highest number in five years, and the
index of small business optimism is at a low not seen in nearly
two decades.
(4) More than 2,000,000 homes are in foreclosure and
millions of homeowners are falling behind in their mortgage
payments; the housing market in terms of construction and sales
has undergone an historic decline; and the declining value of
housing means Americans' largest single investment, the home,
is no longer a safe harbor for savings, nest eggs, social
mobility or the transfer of generational wealth.
(5) Notwithstanding passage of the Patient Protection and
Affordable Care Act, a privatized health care system has made
quality health care beyond the reach of most Americans.
(6) The cost of higher education has put higher academic
attainment outside the reach of millions more young Americans,
and the current generation of young Americans will not be able
to attain the quality of life of their parents, reversing a
long-standing trend.
(7) The American Society of Civil Engineers has estimated
that there is $2.2 trillion in unmet infrastructure needs.
Cities and States, urban and rural areas all have an urgent
need to rebuild and repair roads, bridges, railroads, water
systems, sewer systems and other infrastructure but lack the
necessary funds, bond-issuing capacity and other needs which
has led to America's infrastructure falling into disrepair.
(8) The Board of Governors of the Federal Reserve System
have compounded the economic crisis by failing to take decisive
action to move the economy forward, Wall Street, which was
bailed out by the American people, is not investing its rising
assets in Main Street America, and individual investors are
beginning to turn away from the stock market.
(9) Some banks, many of which received government bailouts,
are not investing in small businesses, nor in the creation of
jobs, the private sector is not creating jobs, and in fact most
businesses are freezing their employment levels.
(10) Congress is stymied by competing forces: a desire to
put people to work and an aversion to borrowing money to create
programs to do so.
(11) Confidence in the United States' economic leadership
at home and around the world is waning, the value of our
currency cannot be securely maintained, and no other path to
economic recovery exists which will create the changes
necessary to put people back to work, invest in rebuilding
America's infrastructure, i.e. highway, rail, airport, harbors,
light rail, communication, shipping, water, sewer, education,
and civil defense.
(12) The aforementioned conditions require comprehensive
action by the United States Congress to create full employment,
invest in America and secure our Nation's long-term economic,
social and political future; and that such action is within our
Constitutional right and responsibility.
(13) The authority to create money is a sovereign power
vested in the Congress under Article I, Section 8 of the
Constitution.
(14) The enactment of the Federal Reserve Act in 1913 by
Congress effectively delegated the sovereign power to create
money, to the Federal Reserve system and private financial
industry.
(15) This ceding of Constitutional power has contributed
materially to a multitude of monetary and financial
afflictions, including:
(A) growing and unreasonable concentration of
wealth;
(B) unbridled expansion of national debt, both
public and private;
(C) excessive reliance on taxation of citizens for
raising public revenues;
(D) devaluation of the currency;
(E) drastic increases in the cost of public
infrastructure investments;
(F) record levels of unemployment and
underemployment; and
(G) persistent erosion of the ability of Congress
to exercise its Constitutional responsibilities to
provide resources for the general welfare of all the
American people.
(16) A debt-based monetary system, where money comes into
existence primarily through private bank lending, can neither
create, nor sustain, a stable economic environment, but has
proven to be a source of chronic financial instability and
frequent crisis, as evidenced by the near collapse of the
financial system in 2008.
(17) Banks increased their value by lending money
imprudently, which greatly inflated the value of bank holdings,
exposing depositors and taxpayers to the risks of schemes like
the bundling of subprime mortgages, and ultimately bringing
undercapitalized banks and the entire financial system to the
edge of ruin, creating circumstances where the taxpayers of the
United States were called upon to save the banks from their own
imprudent lending practices, misspending and mis-investments.
The banks' ability to create money out of nothing ultimately
became the taxpayers' liability, and raises a fundamental
question about a practice of money creation which threatens the
wealth of the American people.
(18) Abolishing private money creation can be achieved with
minimal disruption to current banking operations, regulation,
and supervision.
(19) The creation of money by private financial
institutions as interest-bearing debts should cease once and
for all.
(20) Reclaiming the power of the Federal Government to
originate money, and to spend or lend money into circulation as
needed, eliminates the need to treat money as a Federal
liability or to pay interest charges on the Nation's money
supply to financial institutions; it also removes the undue
influence of private financial institutions over public policy.
(21) Under the current Federal Reserve System, the persons
responsible for the conduct of United States monetary policy
have been unaccountable to the Congress and the Nation, have
resisted auditing by the Government Accountability Office, and
have claimed exemptions from some Federal statutes, including
the Civil Rights Act of 1964, that apply to all agencies of the
Federal Government.
(22) The implementation of United States monetary policy by
the Board of Governors of the Federal Reserve System has failed
to promote full employment, and the failure of the Board of
Governors to safeguard the financial system against wholesale
fraud and abuse of citizens, demonstrates the risks of
maintaining a system wherein the power to create and regulate
money has been delegated to private individuals who are
unaccountable to the People of the United States in any way,
even through their representatives in Congress.
(23) An examination of the historical record demonstrates
that the exercise of control by the United States Government
over the money system has provided greater moderation in the
supply of money and promoting the general welfare, and has been
indispensable in times of national emergency for generating
resources required to support public investment, provide for
national defense, and promote the general welfare, and is
therefore superior to private control over the money system.
(24) As our money system is a key pillar in maintaining
general economic welfare and as the Federal Reserve System and
its private banking partners has consistently failed to promote
or preserve the general welfare, it is essential that Congress,
in the name of protecting the economic lives of the American
people and the long-term security of our Nation, reassume the
powers and responsibilities granted to it by the Constitution.
(b) Purposes.--The purposes of this Act are as follows:
(1) To create a Monetary Authority which shall pursue a
monetary policy based on the governing principle that the
supply of money in circulation should not become inflationary
nor deflationary in and of itself, but will be sufficient to
allow goods and services to move freely in trade in a balanced
manner. The Monetary Authority shall maintain long run growth
of the monetary and credit aggregates commensurate with the
economy's long run potential to increase production, so as to
promote effectively the goals of maximum employment, stable
prices, and moderate long-term interest rates.
(2) To create a full employment economy as a matter of
national economic defense; to provide for public investment in
capital infrastructure; to provide for reducing the cost of
public investment; to retire public debt; to stabilize the
Social Security retirement system; to restore the authority of
Congress to create and regulate money, to modernize and provide
stability for the monetary system of the United States, and for
other public purposes.
(3) To abolish the creation of money, or purchasing power,
by private persons through lending against deposits, by means
of fractional reserve banking, or by any other means.
(4) To enable the Federal Government to invest or lend new
money into circulation as authorized by Congress and to provide
means for public investment in capital infrastructure.
(5) To incorporate the Federal Reserve System into the
Executive Branch under the United States Treasury, and to make
other provisions for reorganization of the Federal Reserve
System.
(6) To provide for an orderly transition.
(7) To make other provisions necessary to accomplish the
purposes of this Act.
SEC. 3. DEFINITIONS.
(a) In General.--For purposes of this Act, the following
definitions shall apply:
(1) Bureau.--The term ``Bureau'' means the Bureau of the
Federal Reserve established under section 314 of title 31,
United States Code, as added by section 303.
(2) Deposit.--The term ``deposit''--
(A) has the meaning given such term in section 3(l)
of the Federal Deposit Insurance Act); and
(B) includes--
(i) a member account (as defined in section
101(5) of the Federal Credit Union Act) in a
credit union; and
(ii) any transaction account.
(3) Depository institution.--The term ``depository
institution''--
(A) has the same meaning as in section 3 of the
Federal Deposit Insurance Act; and
(B) includes any credit union (as defined in
section 101 of the Federal Credit Union Act).
(4) Instrument of indebtedness of the united states;
treasury instruments.--The terms ``instrument of indebtedness
of the United States'' and ``Treasury instrument'' include any
obligation issued under subchapter I of chapter 31 of title 31,
United States Code.
(5) Member bank.--The term ``member bank'' has the same
meaning as in the first section of the Federal Reserve Act.
(6) Money.--The term ``money'' refers to United States
Money, as established under title I.
(7) Monetary authority.--The term ``Monetary Authority''
means the Monetary Authority established under section 302.
(8) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(9) State.--The term ``State'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act.
(10) Effective date.--The term ``effective date'' means the
date determined and published in the Federal Register by the
Secretary, during the 90-day period beginning on the date of
the enactment of this Act, that--
(A) is not less than 1 year after such date of
enactment and not more than 2 years after such date;
and
(B) is the date on which the designated provisions
of this Act take effect.
(b) Technical and Conforming Amendment to the FDIA.--Section 3(l)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)) is amended by
adding at the end the following:
``Such term does not include any amount on which any interest is
paid or which is received or held by a bank or savings association
pursuant to a loan agreement for a fixed term of time (as determined
without regard to any designation on the agreement as a loan,
certificate, or other particular instrument).''.
SEC. 4. COORDINATION WITH OTHER LAW.
(a) In General.--This Act shall supersede any provision of Federal
law in effect on the day before the date of the enactment of this Act
that is inconsistent with any provision of this Act but only to the
extent of such inconsistency.
(b) Technical and Conforming Amendments.--Before the end of the 6-
month period beginning on the date of the enactment of this Act, the
Secretary of the Treasury shall submit to the Congress a proposed draft
of legislation of the Monetary Authority that, if enacted, would
implement such technical and conforming amendments as the Monetary
Authority may recommend--
(1) to repeal the provisions of law referred to in
subsection (a) that are inconsistent with this Act; and
(2) to further clarify and implement the provisions of this
Act.
TITLE I--ORIGINATION OF UNITED STATES MONEY
SEC. 101. EXERCISE OF CONSTITUTIONAL AUTHORITY TO CREATE MONEY.
(a) In General.--Pursuant to the exercise by the Congress of the
authority contained in the 5th clause of section 8 of Article I of the
Constitution of the United States of America--
(1) the authority to create money within the United States
shall hereafter reside exclusively with the Federal Government;
and
(2) the money so created shall be known as United States
Money and denominated and expressed as provided in section 5101
of title 31, United States Code.
(b) Exercise of Sovereign Power.--The creation of United States
Money under this Act is the legal expression of the sovereign power of
the Nation and confers upon its bearer an unconditional means of
payment.
(c) Limitation on Expression.--Beginning on the effective date--
(1) only the coin, notes, or other forms of legal tender,
including electronic currency, originated by the United States
Treasury under the authority of this Act shall be deemed as
United States money; and
(2) it shall be unlawful for any person to designate any
credit, note, bond, script or other financial instrument as
United States Money.
SEC. 102. UNLAWFUL FOR PERSONS TO CREATE MONEY.
Any person who creates or originates United States money by lending
against deposits, through so-called fractional reserve banking, or by
any other means, after the effective date shall be fined under title
18, United States Code, imprisoned for not more than 5 years, or both.
SEC. 103. PRODUCTION OF UNITED STATES MONEY.
(a) Commencing Full Production of United States Currency.--Section
5115 of title 31, United States Code, is amended by striking
subsections (a) and (b) and inserting the following new subsections:
``(a) In General.--In order to furnish suitable notes for
circulation as United States money, the Secretary of the Treasury shall
cause plates and dies to be engraved in the best manner to guard
against counterfeits and fraudulent alterations, and shall have printed
therefrom and numbered such quantities of such notes of the same
denominations as are currently issued.
``(b) Form and Tenor.--United States currency notes for circulation
as United States money shall be in form and tenor as directed by the
Secretary of the Treasury.''.
(b) Ceasing Production of Federal Reserve Notes.--The Secretary of
the Treasury shall wind-down and cease production of Federal reserve
notes under the 8th undesignated paragraph of section 16 of the Federal
Reserve Act (12 U.S.C. 418) as quickly as practicable after the date of
the enactment of this Act, but no later than the effective date, in
coordination with the start-up and maintenance of production of United
States currency under section 5115 of title 31, United States Code. The
Secretary shall ensure that at all times the amount of Federal Reserve
notes in circulation is sufficient to meet demand until the production
of United States currency is sufficient to meet such demand.
(c) Continuing Circulation Until Retirement.--Any Federal Reserve
notes in circulation shall continue to be legal tender until retired in
accordance with applicable provisions of law.
SEC. 104. LEGAL TENDER.
(a) In General.--United States Money shall enter into general
domestic circulation as full legal tender in payment of all debts
public and private.
(b) Technical and Conforming Amendment.--Section 5103 of title 31,
United States Code, is amended by striking ``(including Federal reserve
notes and circulating notes of Federal reserve banks and national
banks)'' and inserting ``in the form of United States Money''.
SEC. 105. DISBURSEMENTS TO BE DENOMINATED IN UNITED STATES MONEY.
On the effective date, all United States Government disbursements
shall be denominated in United States Money, the unit being the dollar,
symbolized as $.
SEC. 106. ORIGINATION IN LIEU OF BORROWING.
(a) In General.--After the effective date, and subject to
limitations established by the United States Monetary Authority under
provisions of section 302, the Secretary shall originate United States
Money to address any negative fund balances resulting from a shortfall
in available Government receipts to fund Government appropriations
authorized by Congress under law.
(b) Prohibition on Government Borrowing.--After the effective date,
unless otherwise provided by an Act of the Congress enacted after such
date--
(1) no amount may be borrowed by the Secretary from any
source; and
(2) no amount may be borrowed by any Federal agency or
department, any independent establishment of the executive
branch, or any other instrumentality of the United States
(other than a national bank, Federal savings association, or
Federal credit union) from any source other than the Secretary.
(c) Rule of Construction.--No provision of this Act shall be
construed as preventing the Congress from exercising its constitutional
authority to borrow money on the full faith and credit of the United
States.
(d) Technical and Conforming Amendment.--On the effective date,
chapter 31 of title 31, United States Code, is hereby repealed, subject
to the retirement of outstanding instruments of indebtedness of the
United States in accordance with section 401.
SEC. 107. RETIREMENT OF INSTRUMENTS OF INDEBTEDNESS.
Before the effective date, the Secretary shall commence to retire
all outstanding instruments of indebtedness of the United States by
payment in full of the amount legally due the bearer in United States
Money, as such amounts become due.
SEC. 108. ACCOUNTING.
(a) In General.--The Secretary shall account for the disbursement
of United States Money and of current fund balances through accounting
reports maintained and published by the Secretary and by departments
and agencies of the United States Government.
(b) GAO Audit.--The Comptroller General of the United States shall
conduct an independent biennial audit.
TITLE II--ENTRY OF UNITED STATES MONEY INTO CIRCULATION
SEC. 201. ENTRY OF UNITED STATES MONEY INTO CIRCULATION.
The Secretary shall cause United States Money to enter into
circulation by and through any of the following means:
(1) Any origination or disbursement of funds to accomplish
Federal expenditures authorized and appropriated by an Act of
the Congress.
(2) Any disbursement to retire outstanding instruments of
indebtedness of the Federal Government or the Secretary of the
Treasury as such instruments become due.
(3) Any contribution authorized by an Act of the Congress
subject to any limitation established by the Monetary Authority
to the Revolving Fund established in section 302 of this Act.
(4) Any action provided for in the transitional
arrangements specified in title IV of this Act, including the
conversion of all deposits in transaction accounts into United
States Money.
(5) Any exercise of ``lender of last resort'' emergency
authorities under the emergency procedures specified in section
305.
(6) Any purchase of stock in a Federal reserve bank from a
member bank and of any other assets as prescribed under the
Federal Reserve Act as required to accomplish the purposes of
section 301.
(7) Any other means, and for any other purpose explicitly
authorized by an Act of the Congress that becomes law after the
effective date of this Act.
TITLE III--RECONSTRUCTION OF THE FEDERAL RESERVE SYSTEM
SEC. 301. RECONSTITUTION OF THE FEDERAL RESERVE.
(a) Government Acquisition of All Net Assets of Federal Reserve
System.--On the effective date, the Secretary shall purchase on behalf
of the United States all net assets in the Federal Reserve System,
including the Federal reserve banks, according to the rules specified
in the Federal Reserve Act (12 U.S.C. 288) for this purpose.
(b) Repayment of Reserves.--Any reserves of any member bank that is
held by any Federal reserve bank shall be returned to the member bank
in the form of United States Money, subject to the provisions contained
in sections 401 and 402(b).
SEC. 302. ESTABLISHMENT OF THE UNITED STATES MONETARY AUTHORITY.
(a) Monetary Authority.--
(1) Establishment.--
(A) In general.--There is hereby established the
Monetary Authority as an authority within the
Department of the Treasury under the general oversight
of the Secretary of the Treasury.
(B) Autonomy of monetary authority.--The Secretary
of the Treasury may not intervene in any matter or
proceeding before the Monetary Authority, unless
otherwise specifically provided by law.
(C) Independence of monetary authority.--The
Secretary of the Treasury may not delay, prevent, or
intervene in the issuance of any regulation or other
determination of the Monetary Authority, including the
determination of the amounts of money to be originated
and most efficient method of disbursement consistent
with the appropriations of Congress and the statutory
objectives of monetary policy as specified in this Act.
(2) Membership.--
(A) In general.--The Monetary Authority shall
consist of 9 public members appointed by the president,
by and with the advice and consent of the Senate.
(B) Terms.--
(i) In general.--Except as provided in
subparagraph (E), each member of the Monetary
Authority shall be appointed to a term of 6
years.
(ii) Continuation of service.--Each member
of the Monetary Authority may continue to serve
after the expiration of the term of office to
which such member was appointed until a
successor has been appointed and qualified.
(C) Political affiliation.--Not more than 4 of the
members of the Monetary Authority may be members of the
same political party.
(D) Vacancy.--
(i) In general.--Any vacancy on the
Monetary Authority shall be filled in the
manner in which the original appointment was
made.
(ii) Interim appointments.--Any member
appointed to fill a vacancy occurring before
the expiration of the term for which such
member's predecessor was appointed shall be
appointed only for the remainder of such term.
(E) Staggered terms.--Of the members first
appointed to the Monetary Authority after the enactment
of this Act--
(i) 1 shall be appointed for a term of 2
years;
(ii) 2 shall be appointed for a term of 3
years;
(iii) 2 shall be appointed for a term of 4
years;
(iv) 2 shall be appointed for a term of 5
years; and
(v) 2 shall be appointed for the full term
of 6 years.
(3) Chairperson.--One of the members of the Monetary
Authority shall be designated by the President as the
Chairperson of the Monetary Authority.
(4) Duties.--The Monetary Authority shall--
(A) establish monetary supply policy and monitor
the Nation's monetary status; and
(B) carry out such other responsibilities as the
President may delegate to the Monetary Authority or
that may be provided by an Act of Congress.
(5) Governing principle of monetary policy.--The Monetary
Authority shall pursue a monetary policy based on the governing
principle that the supply of money in circulation should not
become inflationary nor deflationary in and of itself, but will
be sufficient to allow goods and services to move freely in
trade in a balanced manner. The Monetary Authority shall
maintain long run growth of the monetary and credit aggregates
commensurate with the economy's long run potential to increase
production, so as to promote effectively the goals of maximum
employment, stable prices, and moderate long-term interest
rates.
(6) Meetings.--The Monetary Authority shall meet on a
regular basis subject to the call of the Chairperson, the
Secretary, or a majority of the members.
(7) Pay.--The members of the Monetary Authority shall
receive a salary at annual rates equal to the annual rate
determined under section 5 of title 28, United States Code, for
an associate justice.
(8) Staff.--The Monetary Authority may appoint and
establish the pay of such employees as the Monetary Authority
determines is appropriate to assist the Monetary Authority to
carry out the duties imposed under this section.
(b) Responsibility of Secretary.--The Secretary shall regulate the
monetary supply in reasonable accordance with targets established by
the Monetary Authority.
(c) Reports on Discrepancies.--The Secretary shall report to the
Congress any discrepancy between any monetary target and the monetary
supply in excess of 0.5 percent at the end of each quarter.
SEC. 303. ESTABLISHMENT OF THE BUREAU OF THE FEDERAL RESERVE.
(a) In General.--Subchapter I of chapter 3 of title 31, United
States Code, is amended by adding at the end the following new section:
``SEC. 314. BUREAU OF THE FEDERAL RESERVE.
``(a) Establishment.--There is hereby established the Bureau of the
Federal Reserve as a bureau within the Department of the Treasury
(hereafter in this section referred to as the `Bureau').
``(b) Management.--
``(1) Commissioner.--The management of the Bureau shall be
vested in a Commissioner who, with the assistance of the Deputy
Commissioner and such staff as the Commissioner may appoint,
shall carry out the duties vested in the Bureau and the
Commissioner.
``(2) Deputy commissioner.--There is hereby established
within the Bureau the position of Deputy Commissioner.
``(3) Appointment.--The Commissioner and the Deputy
Commissioner shall be appointed by the president, by and with
the advice and consent of the Senate.
``(4) Terms.--
``(A) In general.--The Commissioner and the Deputy
Commissioner shall each be appointed to a term of 7
years.
``(B) Staggered terms.--Notwithstanding
subparagraph (A), the person first appointed Deputy
Commissioner shall be appointed to a term of 4 years.
``(5) Vacancy.--
``(A) In general.--Any vacancy on the Bureau shall
be filled in the manner in which the original
appointment was made.
``(B) Interim appointments.--Any member appointed
to fill a vacancy occurring before the expiration of
the term for which such member's predecessor was
appointed shall be appointed only for the remainder of
such term.
``(c) Duties.--
``(1) Monetary policy.--The Bureau shall--
``(A) administer, under the direction of the
Secretary, the origination and entry into circulation
of United States Money, subject to the limitations
established by the Monetary Authority; and
``(B) administer lending of United States Money to
authorized depository institutions, as described in
section 403 (`Revolving Fund') to ensure that--
``(i) money creation is solely a function
of the United States Government; and
``(ii) fractional reserve lending is ended.
``(2) Transferred functions.--After the effective date, the
Bureau shall exercise all functions consistent with this Act
which, before such date, were carried out under the direction
of the Board of Governors of the Federal Reserve System.
``(3) Itemization by secretary.--Not less than 90 days
before the effective date, the Secretary and the Monetary
Authority shall itemize--
``(A) the functions of the Board of Governors of
the Federal Reserve System that are transferred to the
Bureau pursuant to paragraph (2); and
``(B) the provisions of the Federal Reserve Act and
other provisions of Federal law, relating to the
functions so transferred, in the application of which
the term `Bureau' (as established under this section)
shall be substituted for the term `Board of Governors
of the Federal Reserve System' or `Board', as the case
may be.''.
(b) Clerical Amendment.--The table of sections for subchapter I of
chapter 3 of title 31, United States Code, is amended by adding at the
end the following new item:
``314. Bureau of the Federal Reserve.''.
(c) Role of Board After Enactment.--With effect on the effective
date, the Board of Governors of the Federal Reserve System shall be
dissolved.
SEC. 304. FORECASTING OF DISBURSEMENT REQUIREMENTS.
The Secretary shall--
(1) forecast disbursement requirements on a daily, monthly,
and annual basis;
(2) provide such forecasts to the Congress and the public;
(3) integrate forecasts with the Federal budget process;
(4) maintain a sufficient research capability to
continuously and effectively assess the impact of disbursement
of United States Money on all aspects of the domestic and
international economies; and
(5) report to the Congress and the public regularly on the
economic impact of disbursements of United States Money and the
status of the monetary supply.
SEC. 305. LENDER OF LAST RESORT; EMERGENCY PROCEDURES.
(a) Recommendation of the President Upon Recommendation of
Emergency Board.--The Monetary Authority may not exercise any authority
under the 3rd undesignated paragraph of section 13 of the Federal
Reserve Act unless--
(1) the Emergency Board established under subsection (b)
recommends, upon a vote of 2/3 of the members, to the House of
Representatives and the Senate, that the House of
Representatives and the Senate adopt a concurrent resolution
calling on the President to certify that a national emergency
exists which requires the exercise of such authority;
(2) the House of Representatives and the Senate each adopt,
by a vote of 2/3 of the members present, a concurrent
resolution calling on the President to certify that a national
emergency exists which requires the exercise of such authority;
and
(3) the President issues a certification that a national
emergency exists which requires the exercise of such authority
by the Monetary Authority.
(b) Emergency Board.--There is established for purposes of this
section the Emergency Board which shall consist of the following
members:
(1) The President.
(2) The Secretary of Commerce.
(3) The Secretary of Energy.
(4) The Secretary of Labor.
(5) The Secretary of the Treasury.
(6) The Speaker of the House of Representatives.
(7) The minority leader of the House of Representatives.
(8) The majority leader of the Senate.
(9) The minority leader of the Senate.
(10) The chairpersons and ranking members of the Committee
on Financial Services and the Committee on Oversight and
Government Reform of the House of Representatives.
(11) The chairpersons and ranking members of the Committee
on Banking, Housing, and Urban Affairs and the Committee on
Homeland Security and Governmental Affairs of the Senate.
(c) Rule of Construction.--Except as provided in subsection (a), no
provision of this Act shall be construed as affecting the authority of
the Monetary Authority under the 3rd undesignated paragraph of section
13 of the Federal Reserve Act.
SEC. 306. SAVINGS PROVISIONS AND TRANSFER PROVISIONS.
(a) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--The establishment of the Bureau of the Federal
Reserve shall not affect the validity of any right, duty, or
obligation of the United States, the Bureau (as the successor
to the Board of Governors of the Federal Reserve System or any
Federal reserve bank), or any other person that--
(A) arises under any provision of law relating to
any function of the Board of Governors of the Federal
Reserve System transferred to the Bureau by this title
and amendments made by this title; and
(B) existed on the day before the effective date.
(2) Continuation of suits.--This Act shall not abate any
proceeding commenced by or against the Board of Governors (or
any Federal reserve bank) before the effective date with
respect to any function of the Board of Governors (or any
Federal reserve bank) transferred to the Bureau by this title,
except that the Bureau shall be substituted for the Board of
Governors (or Federal reserve bank) as a party to any such
proceeding as of the effective date.
(b) Transfer of Certain Personnel.--
(1) Identifying employees for transfer.--The Secretary and
the Chairman of the Board of Governors of the Federal Reserve
System shall--
(A) jointly determine the number of employees of
the Board necessary to perform or support the functions
of the Board of Governors that are transferred to the
Monetary Authority (if any) and the Bureau of the
Federal Reserve pursuant to a provision of or amendment
made by this title; and
(B) consistent with the number determined under
subparagraph (A), jointly identify employees of the
Board of Governors for transfer in a manner that the
Secretary and the Board of Governors of the Federal
Reserve System, in their sole discretion, determine to
be equitable.
(2) Identified employees transferred.--All employees of the
Board of Governors of the Federal Reserve System identified
under paragraph (1)(B) shall be transferred to the Monetary
Authority or the Bureau of the Federal Reserve, as the case may
be, for employment.
(3) Federal reserve bank employees.--Employees of any
Federal reserve bank, as of the day before the transfer date
for any employees of the Board of Governors of the Federal
Reserve System, shall be treated as employees of the Board of
Governors for purposes of paragraph (1) and (2).
TITLE IV--TRANSITIONAL ARRANGEMENTS
SEC. 401. CONVERSION OF FEDERAL RESERVE NOTES.
(a) In General.--Before the end of the 120-day period beginning on
the date of the enactment of this Act, the Secretary shall establish
the rules and procedures for converting outstanding Federal reserve
notes to United States Money of equal face value.
(b) Provision of Supply Sufficient for Conversion and Issuance.--
Before the end of the 150-day period beginning on the date of the
enactment of this Act and as Federal reserve notes are converted to
United States Money, the Secretary shall begin providing a sufficient
quantity of United States Money to the domestic banking system to allow
for conversion of all outstanding Federal reserve notes and the
issuance of additional currency as required.
(c) Disbursal of Funds.--After the end of the 180-day period
beginning on the date of the enactment of this Act, all financial
institutions within the United States shall only disburse funds in
United States Money, whether as currency, an addition to an available
account balance, or other instrument.
(d) Disposal of Obsolete Currency.--The Secretary shall promptly
dispose of (in the manner provided under section 5120(b) of title 31,
United States Code, for the disposal of obsolete United States
currency) all Federal reserve notes as they are returned in exchange
for United States Money.
(e) Technical and Conforming Amendment.--Effective at the end of
the 150-day period beginning on the date of the enactment of this Act,
section 16 of the Federal Reserve Act is amended by striking the 8th,
9th, 10th, 11th, and 12th undesignated paragraphs (12 U.S.C. 418, 419,
420, 421, and omitted, respectively).
SEC. 402. REPLACING FRACTIONAL RESERVE BANKING WITH THE LENDING OF
UNITED STATES MONEY.
(a) Conversion Process.--
(1) Deposits.--
(A) In general.--All deposits at any depository
institution shall be designated as and treated as
United States Money (either cash or an electronic
equivalent) and as transaction accounts.
(B) Prohibitions.--In addition to subsection (d),
the following provisions shall apply with respect to
United States Money on deposit in a transaction account
at any depository institution:
(i) Interest.--No interest may be paid or
may accrue on any United States Money on
deposit in a transaction account at any
depository institution.
(ii) Deposits as bailment.--Any United
States Money on deposit in a transaction
account at any depository institution shall--
(I) be treated as a bailment for
the mutual benefit of the parties and
terminable at will; and
(II) as property held in trust as
bailed property, not be treated as an
asset of the depository institution or
as a source of credit.
(C) Exception for long-term savings not subject to
deposit insurance.--
(i) In general.--Subparagraph (B) shall not
apply to any liability of depository
institution to a customer for any amount in an
account at the depository institution pursuant
to a contract that restricts the availability
of any such amount for a fixed term and does
not permit amounts to be transferred in any
manner for the benefit of a third party.
(ii) Fixed-term savings not insured.--Any
account described in clause (i) may not be
treated as a deposit, for purposes of the
Federal Deposit Insurance Act, or as a share
draft account, for purposes of the Federal
Credit Union Act.
(2) Outstanding credit.--Any asset of a depository
institution that results from credit extended against, is
attributable to, or has been accounted for with respect to,
amounts described in paragraph (1)(A) shall, as of the
effective date--
(A) be a liability of the depository institution to
the Federal Government; and
(B) as the outstanding balance is repaid pursuant
to its terms, shall be paid over to the Federal
Government.
(3) Deposit in revolving fund.--The monies paid to the
Federal Government shall be deposited into the Revolving
Account established in section 403.
(4) In general.--Before the effective date and subject to
the requirements of this section, the Monetary Authority shall
establish and publish the accounting rules, pricing, and
processes which will convert all bank credit in circulation as
of the date of such conversion, into United States legal tender
money.
(5) Retention of interest payments.--A depository
institution may keep as income, any interest payment made by a
customer to a depository institution on an outstanding loan for
which the depository institution became indebted to the Federal
Government under paragraph (2).
(b) Treatment of Amounts on Reserve at a Federal Reserve Bank.--The
Monetary Authority shall determine, by the effective date, how the
reserves of a depository institution at a Federal reserve bank pursuant
to section 19 of the Federal Reserve Act shall be treated, so as to
promote a seamless transition to the new system.
(c) Accounts in General.--Before the effective date, the Monetary
Authority shall prescribe new lending and accounting regulations for
various types of accounts including transaction accounts and time
deposit accounts described in subsections (d) and (e).
(d) Transaction Accounts.--
(1) Fractional reserve banking ended.--The regulations
prescribed under subsection (c) shall provide that--
(A) any depository institution shall have a
fiduciary responsibility for the money of any depositor
on deposit in a transaction account which--
(i) shall be held for the exclusive use of
the account holder; and
(ii) may not be used by a depository
institution to fund loans or investments;
(B) a dollar of United States Money shall be on
hand or in a Federal Government account for each dollar
in a transaction account; and
(C) a depository institution may charge a
reasonable fee for providing transaction account
services.
(2) Transaction account defined.--For purposes of this
section, the term, ``transaction account''--
(A) means a deposit or account on which the
depositor or account holder is permitted to make
withdrawals by negotiable or transferable instrument,
payment orders of withdrawal, telephone transfers, or
other similar items for the purpose of making payments
or transfers to third persons or others; and
(B) includes demand deposits, negotiable order of
withdrawal accounts, savings deposits subject to
automatic transfers, and share draft accounts.
(e) United States Money as Source of Loans.--After the effective
date, all lending by depository institutions may be accomplished only
by the lending of actual United States Money that is--
(1) owned by the depository institution from earnings and
or capital contributions by investors;
(2) borrowed at interest from the Federal Government; or
(3) borrowed at interest through the issuance of bonds or
other interest-bearing securities by the lending bank, to the
extent that such bonds or securities are structured in a manner
consistent with the purposes of this Act.
(f) Encouragement of Private, Profit-Making Money Lending
Activity.--The regulations prescribed and actions taken under this
section shall be established and taken in a manner that--
(1) encourages private, profit-making money lending
activity by banking institutions; and
(2) prohibits the creation of private money through the
establishment of lending credit against depository receipts,
sometimes referred to as ``fractional reserve banking''.
SEC. 403. ESTABLISHMENT OF FEDERAL REVOLVING FUND.
(a) Revolving Loan Fund.--Subject to provision in advance in an
appropriation Act, there is hereby established a revolving loan fund in
the Treasury of the United States where amounts received from
depository institutions under terms specified in section 402 of this
Act shall be deposited and made available for relending to banking
institutions and for other purposes.
(b) Administration.--The Revolving Fund shall be administered by
the Bureau under such terms and conditions as the Secretary shall
prescribe consistent with the purposes of this Act.
(c) National Emergency.--In the event of a finding by the President
that a National Emergency exists, and with the concurrence of the
Congress in accordance with the emergency procedures specified under
section 305, the Secretary, on the advice of the Monetary Authority,
may draw upon up to 80 percent of the funds on deposit in the Revolving
Fund. Such funds shall be returned to the Revolving Fund within 3 years
of the date of initial disbursement, either through repayment of loans
or through an Appropriation Act, unless the Secretary receives from the
Congress specific authorization to extend the term of the loans. The
authorization of Congress shall be given by joint resolution.
TITLE V--ADDITIONAL PROVISIONS
SEC. 501. DIRECT FUNDING OF INFRASTRUCTURE IMPROVEMENTS.
(a) Report Required on Opportunities for Direct Funding.--Before
the effective date, the Secretary, after consultation with the heads of
Executive branch departments, agencies and independent establishments,
shall report to the Congress on opportunities to utilize direct funding
by the United States Government to modernize, improve, and upgrade the
physical economy of the United States in such areas as transportation,
agriculture, water usage and availability, sewage systems, medical
care, education, and other infrastructure systems, to promote the
general welfare, and to stabilize the Social Security retirement
system.
(b) Broad Equitable Dispersion of Funding.--Generally, any program
recommended for direct funding shall be undertaken throughout the
Nation based on per capita amounts and other criteria to assure equity
as determined by the Monetary Authority.
SEC. 502. INTEREST RATE CEILINGS.
(a) Limit on Amount of Financing Fees.--The total amount of
interest charged by a financial institution on any extension of loans
(other than a mortgage) to any individual borrower through
amortization, including all fees and service charges, shall not exceed
the total amount of the loan extended.
(b) Limit on Rate.--The annual percentage rate applicable to any
loan of money may not exceed 8 percent on unpaid balances, inclusive of
all charges.
SEC. 503. AUTHORITY OF FDIC.
Except as provided in section 402 and the amendment made by section
3(b), no provision of this Act shall be construed as altering or
affecting any authority or function of the Federal Deposit Insurance
Corporation. No later than 12 months after the date of the enactment of
this Act, the Chairperson of the Board of Directors of the Federal
Deposit Insurance Corporation shall study and make recommendations to
the Congress regarding any changes in authorities, including expanded
supervision and monitoring, required to enhance the oversight and
regulatory roles of the Federal Deposit Insurance Corporation under
this Act.
SEC. 504. MONETARY GRANTS TO STATES.
(a) In General.--Each year, the Monetary Authority shall instruct
the Secretary to disperse grants over a 12-month period to the States
equal to 25 percent of the money created under this title in the prior
year. In the first year the amount of such grants shall be 25 percent
of the anticipated money creation in that first year.
(b) Use of Grants for Broad-Based Purposes.--The States may use
such funds in broadly designated areas of public infrastructure,
education, health care and rehabilitation, pensions, and paying for
unfunded Federal mandates.
SEC. 505. EDUCATION FUNDING PROGRAM.
Before the end of the 120-day period beginning on the date of the
enactment of this Act, the Secretary, in cooperation with the Secretary
of Education, shall provide recommendations to the Congress for a
program to help fund our educational system that will put the United
States on par with other highly developed nations, and to sufficiently
provide for universal pre-kindergarten, fully funded State programs for
elementary and secondary education and universal college at every 2-
and 4-year public institution of higher learning and create a learning
environment so that every child has an opportunity to reach their full
educational potential.
SEC. 506. SOCIAL SECURITY TRUST FUNDS.
The Secretary in consultation with the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability
Insurance Trust Funds shall submit to the Monetary Authority any
requests to cover impending deficits in Social Security Trust Fund
accounts.
SEC. 507. INITIAL MONETARY DIVIDEND TO CITIZENS.
(a) In General.--Before the effective date, the Secretary, in
cooperation with the Monetary Authority, shall make recommendations to
the Congress for payment of a Citizens Dividend as a tax-free grant to
all United States citizens residing in the United States in order to
provide liquidity to the banking system at the commencement of this
Act, before governmental infrastructure expenditures have had a chance
to work into circulation.
(b) Study of Effects of Citizens Dividend.--The Secretary shall
maintain a thorough study of the effects of the Citizens Dividend
observing its effects on production and consumption, prices, morale,
and other economic and fiscal factors.
SEC. 508. UNIVERSAL HEALTH CARE FUNDING.
The Congress shall be aware that funding through this Act is
available for a universal health care plan as may be enacted by
Congress.
SEC. 509. RESOLVING THE MORTGAGE CRISIS.
The Congress shall be aware that funding through this Act is
available for Congressional enactments for resolving aspects of the
mortgage crisis.
SEC. 510. INTEREST FREE LENDING TO LOCAL GOVERNMENTAL BODIES.
Before the end of the 180-day period beginning on the date of the
enactment of this Act, the Secretary shall provide recommendations to
the Congress for a program of interest-free lending of United States
Money to State and local governmental entities, including school boards
and emergency fire services for infrastructure improvements under their
control and within their jurisdictions, based on per capita amounts and
other criteria to assure equity as determined by the Monetary
Authority.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Domestic Monetary Policy and Technology.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
Subcommittee Hearings Held.
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