Depository Institutions Deregulation and Monetary Control Act(DIDMCA)

Law

12 U.S.C. 248-1, 1735f-7a  | (1980)

changed some of the rules—many of them obsolete—under which U.S. financial institutions had operated for nearly half a century. The principal objectives were to improve monetary control and equalize more nearly its cost among depository institutions; to remove impediments to competition for funds by depository institutions, while allowing the small saver a market rate of return; and to expand the availability of financial services to the public and reduce competitive inequalities among financial institutions offering them. The major changes were: (1) Uniform Federal Reserve requirements were phased in on transaction accounts (such as demand deposits, NOW accounts, telephone transfers, and automatic transfers) at all depository institutions—commercial banks (whether Federal Reserve members or not), savings and loan associations, mutual savings banks, and credit unions. (2) The Federal Reserve Board was authorized to collect all data necessary for the monitoring and control of money and credit aggregates. (3) Access to loans at the discount rate from Federal Reserve banks was widened to include any depository institution issuing transaction accounts or nonpersonal time deposits. (4) The Federal Reserve was to price its services, to which all depository institutions would now have access. (5) Regulation Q, which had long set interest-rate ceilings on deposits, was to be phased out over a six-year period. (6) An attempt was made to deal effectively with the state usury laws. (7) NOW accounts were authorized on a nationwide basis and could be offered by all depository institutions. Other services were extended. (8) The permissible activities of thrift institutions were broadened considerably. (9) Deposit insurance at commercial banks, savings banks, savings and loan associations, and credit unions was raised from $40,000 to $100,000. (10) The “truth in lending” disclosure and financial regulations were simplified to make it easier for creditors to comply.