View source for Depository Institutions Deregulation and Monetary Control Act

{{Short description|US financial statute passed in 1980}}
{{Infobox U.S. legislation
| shorttitle        = Depository Institutions Deregulation and Monetary Control Act
| othershorttitles  = {{unbulleted list|Depository Institutions Deregulation and Monetary Control Act of 1980|Consumer Checking Account Equity Act of 1980|Depository Institutions Deregulation Act of 1980|Financial Regulation Simplification Act of 1980|Monetary Control Act of 1980|Truth in Lending Simplification and Reform Act}}
| longtitle         = An Act to facilitate the implementation of monetary policy, to provide for the gradual elimination of all limitations on the rates of interest which are payable on deposits and accounts, and to authorize interest-bearing transaction accounts, and for other purposes.
| colloquialacronym = 
| nickname          = Consumer Checking Account Equity Act of 1979
| enacted by        = 96th
| effective date    = March 31, 1980
| public law url    = http://www.gpo.gov/fdsys/pkg/STATUTE-94/pdf/STATUTE-94-Pg132.pdf
| cite public law   = 96-221
| cite statutes at large = {{usstat|94|132}}
| acts amended    = 
| acts repealed   = 
| title amended   = [[Title 12 of the United States Code|12 U.S.C.: Banks and Banking]]
| sections created = <!--{{USC}} can be used-->
| sections amended = {{Usc-title-chap|12|3}} § 226
| leghisturl      = http://thomas.loc.gov/cgi-bin/bdquery/z?d096:HR04986:@@@R
| introducedin    = House
| introducedbill  = {{USBill|96|H.R.|4986}}
| introducedby    = [[Fernand St. Germain]] ([[Democratic Party (United States)|D]]–[[Rhode Island|RI]])
| introduceddate  = July 27, 1979
| committees      = [[United States House Committee on Financial Services|House Banking, Finance, and Urban Affairs]], [[United States Senate Committee on Banking, Housing, and Urban Affairs|Senate Banking, Housing, and Urban Affairs]]
| passedbody1     = House
| passeddate1     = September 11, 1979
| passedvote1     = [http://www.govtrack.us/congress/votes/96-1979/h413 367-39]
| passedbody2     = Senate
| passedas2       = <!-- used if the second body changes the name of the legislation -->
| passeddate2     = November 1, 1979
| passedvote2     = [http://www.govtrack.us/congress/votes/96-1979/s384 76-9]
| conferencedate  = March 21, 1980
| passedbody3     = House
| passeddate3     = March 27, 1980
| passedvote3     = [http://www.govtrack.us/congress/votes/96-1980/h819 380-13]
| agreedbody3     = <!-- used when the other body agrees without going into committee -->
| agreeddate3     = <!-- used when the other body agrees without going into committee -->
| agreedvote3     = <!-- used when the other body agrees without going into committee -->
| agreedbody4     = <!-- used if agreedbody3 further amends legislation -->
| agreeddate4     = <!-- used if agreedbody3 further amends legislation -->
| agreedvote4     = <!-- used if agreedbody3 further amends legislation -->
| passedbody4     = Senate
| passeddate4     = March 28, 1980
| passedvote4     = agreed
| signedpresident = [[Jimmy Carter]]
| signeddate      = March 31, 1980
| unsignedpresident = <!-- used when passed without presidential signing -->
| unsigneddate    = <!-- used when passed without presidential signing -->
| vetoedpresident = <!-- used when passed by overriding presidential veto -->
| vetoeddate      = <!-- used when passed by overriding presidential veto -->
| overriddenbody1 = <!-- used when passed by overriding presidential veto -->
| overriddendate1 = <!-- used when passed by overriding presidential veto -->
| overriddenvote1 = <!-- used when passed by overriding presidential veto -->
| overriddenbody2 = <!-- used when passed by overriding presidential veto -->
| overriddendate2 = <!-- used when passed by overriding presidential veto -->
| overriddenvote2 = <!-- used when passed by overriding presidential veto -->
| amendments      = 
| SCOTUS cases    = 
}}
The '''Depository Institutions Deregulation and Monetary Control Act of 1980''' ({{USBill|96|HR|4986}}, {{USPL|96|221}}) (often abbreviated '''DIDMCA''' or '''MCA''') is a [[United States federal law|United States federal]] financial statute passed in 1980 and signed by President [[Jimmy Carter]] on March 31.<ref>{{Cite web | url=http://www.presidency.ucsb.edu/ws/index.php?pid=33206#axzz1mquUfO88 |title = Depository Institutions Deregulation and Monetary Control Act of 1980 Remarks on Signing H.R. 4986 into Law. &#124; the American Presidency Project}}</ref>

==Purposes==

DIDMCA gave the [[Federal Reserve]] greater control over non-member banks.

* It forced all banks to abide by the Fed's rules.
* It relaxed the rules under which national banks could merge.
* It removed the power of the Federal Reserve Board of Governors under the [[Glass–Steagall Act]] to use [[Regulation Q]] to set maximum interest rates for any deposit accounts other than [[demand deposit]] accounts (with a six-year phase-out).<ref name=Gilbert/>
* It allowed [[Negotiable Order of Withdrawal account]]s to be offered nationwide.<ref name=Gilbert>Gilbert, Alton. "Requiem for Regulation Q: What It Did and Why It Passed Away", [[Federal Reserve Bank of St. Louis]]: pp. 31-33. [http://research.stlouisfed.org/publications/review/86/02/Requiem_Feb1986.pdf]</ref>
* It raised the [[deposit insurance]] of US banks and credit unions from $40,000 to $100,000.
* It allowed [[credit union]]s and [[savings and loan]]s to offer [[checkable deposit]]s.
* It allowed institutions to charge any loan interest rates they chose.<ref name="Minton">Michelle Minton, [http://cei.org/sites/default/files/Michelle%20Minton%20-%20CRA%20-%20FINAL_WEB.pdf The Community Reinvestment Act's Harmful Legacy, How It Hampers Access to Credit],  [[Competitive Enterprise Institute]], No. 132, March 20, 2008.</ref><ref name="Atlas Dreier">John Atlas and Peter Dreier, [http://www.prospect.org/cs/articles?article=the_conservative_origins_of_the_subprime_mortgage_crisis The Conservative Origins of the Sub-Prime Mortgage Crisis] {{Webarchive|url=https://web.archive.org/web/20080411171345/http://www.prospect.org/cs/articles?article=the_conservative_origins_of_the_subprime_mortgage_crisis |date=2008-04-11 }},  [[The American Prospect]], December 18, 2007.</ref>

==Reasons and background==

The act was in part a response to economic volatility and financial innovations of the 1970s that increasingly pressed the highly regulated savings and loan industry and arguably had [[unintended consequences]] that helped lead to the collapse and subsequent bailout of that financial sector.  While S&Ls were freed to pay depositors higher interest rates, the institutions continued to carry large portfolios of loans paying them much lower rates of return; by 1981, 85 percent of the thrifts were losing money and the congressional response was the [[Garn–St. Germain Depository Institutions Act|Garn–St Germain Depository Institutions Act of 1982]].<ref>{{Cite book|last=Collins|first=Robert M.|title=Transforming America: Politics and Culture in the Reagan Years|publisher=Columbia University|year=2007|isbn=978-0-231-51130-8|location=New York|pages=83–84}}</ref>

The bill's passage is considered an important shift in the Democratic Party's positioning on economic regulation, as the party had historically defended New Deal era financial regulations, but had now come to favor financial deregulation. According to a 2022 study, this shift happened as a consequence of the congressional reforms of the 1970s, which undermined parochial and Southern populist interests within the Democratic Party. These parochial and populist interests favored a decentralized banking system. The party subsequently pursued deregulatory reforms that it perceived as beneficial to savers and consumers.<ref>{{Cite journal |last=Barton |first=Richard |date=2022 |title=Upending the New Deal Regulatory Regime: Democratic Party Position Change on Financial Regulation |journal=Perspectives on Politics |volume=22 |issue=2 |pages=391–408 |language=en |doi=10.1017/S153759272200113X |s2cid=252061496 |issn=1537-5927|doi-access=free }}</ref>

==Effects and Criticism==

Despite the initial popularity of the DIDMCA, legislative actions in states like [[Rhode Island]] and [[Minnesota]] have challenged its provisions, particularly those allowing national banks to export interest rates. These states are considering bills to opt out of this federal provision, aiming to exert more local control over interest rate regulations.<ref>{{cite web |last1=Griffith |first1=Jason Cover, James Kim, Caleb Rosenberg, Jeremy Rosenblum, Taylor Gess, Melanie |title=Rhode Island and Minnesota Latest States with Bills Opting Out of Federal Banking Law Allowing Interest Rate Exportation |url=https://www.consumerfinancialserviceslawmonitor.com/2024/02/rhode-island-and-minnesota-latest-states-with-bills-opting-out-of-federal-banking-law-allowing-interest-rate-exportation/ |website=Consumer Financial Services Law Monitor |access-date=14 March 2024 |date=14 February 2024}}</ref>

The legislative actions seeking to repeal DIDMCA-like policies have been criticized by examining [[Colorado|Colorado's]] experience, as detailed in a study by J Howard Beales III and Andrew Stivers. They argue that Colorado's decision to opt out of federal banking law equality has led to reduced credit access, especially for consumers with lower [[Credit score|credit scores]] or insufficient [[credit history]]. Their analysis suggests that such legislative limits on competition can exacerbate negative effects on citizens most in need of access to credit, highlighting the broader implications of undermining the DIDMCA's objectives.<ref>{{cite web |last1=Beales III |first1=J. Howard |last2=Stivers |first2 = Andrew |title = The Impact of Colorado Ending Equal Competition between State and National Banks|date=18 October 2023 |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4607006 |website = SSRN |ssrn=4607006 |access-date=14 March 2024}}</ref>

==References==
{{reflist}}

==Further reading==
* {{cite book|last=Allen|first=Larry|title=The Encyclopedia of Money|url=https://archive.org/details/encyclopediamone00alle|url-access=limited|year=2009|publisher=[[ABC-CLIO]]|edition=2nd|place=[[Santa Barbara, California|Santa Barbara, CA]]|pages=[https://archive.org/details/encyclopediamone00alle/page/n129 111]–113|isbn=978-1598842517}}

==External links==
{{Portal|Banks}}
*[http://www.fdic.gov/regulations/laws/rules/8000-2200.html FDIC page on act]
*[https://fraser.stlouisfed.org/title/1032 Public Law 96-221, 96th Congress, H.R. 4986: Depository Institutions Deregulation and Monetary Control Act of 1980]

{{Federal Reserve System}}
{{Presidency of Jimmy Carter}}
{{Bank regulation in the United States}}

[[Category:1980 in American law]]
[[Category:Federal Reserve System]]
[[Category:United States federal banking legislation]]
[[Category:Federal Deposit Insurance Corporation]]
[[Category:Savings and loan crisis]]