Monetary Control Act of 1979

(Measure passed House, amended, roll call #366 (340-20))

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 if the Board determines, on the basis of quarterly examinations, that the total bank deposits held by member banks drops below 67.5 percent of the total deposits held by all banks.

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 (except deposits subject to telephoned orders of withdrawal or transfers limited to a maximum of six per month) 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; and (2) "category B deposits" which include the total amount of time deposits with initial maturities of less than 180 days (exclusive of short-term personal time deposits) in the abovementioned institutions. Exempts deposits payable only outside the States of the United States from the reserve requirements.

Confers authority on the Board to impose or change reserve requirements for the sole purpose of enabling the Board to implement monetary policy.

Exempts from reserve requirements any financial institution which is organized solely to do business with other financial institutions, is owned primarily by such institutions, and does not do business with the general public.

Sets forth the formula for determining the amount of categories A and B deposits exempt from reserve requirements.

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 member banks and other depository institutions, in the event of further decline in Federal Reserve membership, to maintain reserves against their category A deposits at the rate of 11 percent or at a rate between four and 17 percent as prescribed by the Board. Requires no reserves initially against category B deposits but authorizes the Board to prescribe a reserve ratio between zero and eight percent on such deposits.

States that reserves are required of all depository institutions.

States that foreign branches or subsidiaries of nonmember depository institutions 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 such institutions in the United States to foreign offices or such institutions; (2) loans to United States 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.

Subjects to reserve requirements branches and subsidiaries of nonmember depository institutions which are themselves branches or subsidiaries of foreign banks.

Authorizes the immediate imposition of reserve requirements upon member banks and later, upon nonmember institutions should they be required to maintain reserves exceeding the limits as to ratios and types of liabilities 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. Limits the use of such authority.

Grants certain privileges of member institutions of the Federal Reserve System to nonmember institutions maintaining reserves required by this Act.

Provides a ten year implementation period for nonmember institutions required to maintain reserves under this Act. Phrases in mandatory reserves over an additional five-year period for nonmember State institutions outside the continental United States. Extends a four year transition period to member banks in meeting requirements that exceed those in effect immediately prior to August 1, 1978.

Sets forth reduced reserve requirements for member banks based on the size of their category A deposits which shall remain in effect until deposits subject to Federal Reserve control drop below the 67.5 percent level of all deposits.

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 advances on such notes.

Directs the Board to prepare and publish a schedule of fees for its services and a set of a pricing principles within six months of the date of enactment of this Act.