The text of the bill below is as of Nov 16, 1977 (Passed Congress).
Summary of this bill
The Federal Reserve Reform Act of 1977 enacted a number of reforms to the Federal Reserve, making it more accountable for its actions on monetary and fiscal policy and tasking it with the goal to "promote maximum employment, production, and price stability". The act explicitly established price stability as a national policy goal for the first time. It also required quarterly reports to Congress "concerning the ranges of monetary and credit aggregrates for the upcoming 12 months." It also modified the selection of the Class B and C Reserve Bank Directors. Discrimination on the basis of race, creed, color, sex, or national origin was prohibited, and the composition of the …
PUBLIC LAW 95-188—NOV. 16, 1977 9 1 STAT. 1387 Public Law 95-188 95th Congress An Act To extend the authority for the flexible regulation of interest rates on deposits Nov. 16, 1977 and accounts in depository institutions, to promote the accountability of the [H.R. 9710] Federal Reserve System, and for other purposes. Be it enacted hy the Senate and House of Representatives of the United States of America in Congress assembled^ Depository institutions. TITLE I—REGULATION OF INTEREST RATES Interest rate controls, SEC. 101. Section 7 of the Act of September 21, 1966 (Public L a w extension. 89-597), is amended by striking out "December 15,1977" and inserting 12 u s e 461 note. in lieu thereof "December 15,1978". T I T L E II—AMENDMENTS TO T H E FEDERAL Federal Reserve RESERVE ACT Reform Act of 1977. SEC. 201. This title may be cited as the "Federal Reserve Reform 12 u s e 226 Act of 1977". note. CONGRESSIONAL-FEDERAL RESERVE DIALOG OX MONETARY POLICY SEC. 202. Insert a new section 2A immediately after section 2 of the Federal Reserve Act to read as follows: u GENERAL P O L I C Y : CONGRESSIONAL REVIEW " S E C . 2 A . T h e Board of Governors of the Federal Reserve System 12 u s e 225a. and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long r u n potential to increase production, so as to pro- mote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. The B o a r d of Governors shall con- Semiannual sult with Congress at semiannual hearings before the Committee on hearings before Banking, Housing, and U r b a n Affairs of the Senate and the Com- congressional mittee on Banking, Finance and U r b a n Affairs of the House of Rep- committees. resentatives about the Board of Governors' and the Federal Open Market Committee's objectives and plans with respect to the ranges of growth or diminution of monetary and credit aggregates for the upcoming twelve months, taking account of past and prospective devel- opments in production, employment, and prices. Nothing in this Act shall be interpreted to require t h a t such ranges of growth or diminu- tion be achieved if the Board of Governors and the Federal Open Market Committee determine t h a t they cannot or should not be achieved because of changing conditions.". BOARD OF DIRECTORS OF FEDERAL RESERVE BANKS SEC. 202. T h e following p a r a g r a p h s of section 4 of the Federal Reserve Act are amended: 12 u s e 301 (a) the tenth p a r a g r a p h by inserting after the comma the fol- and note. lowing : "without discrimination on the basis of race, creed, color, 12 u s e 302. sex, or national origin,".
91 STAT. 1388 PUBLIC LAW 95-188—NOV. 16, 1977 12 use 302. (b) the eleventh paragraph by striking all after "members," and substituting "who shall represent the public and shall be elected without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive considera- tion to the interests of agriculture, commerce, industry, services, labor, and consumers.". 12 use 302. (c) the twelfth paragraph by inserting immediately after the first sentence thereof the following sentence: "They shall be elected to represent the public, without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers.". SENATE CONFIRMATION OF CHAIRMAN AND VICE CHAIRMAN OF BOARD OF GOVERNORS SEC. 204. (a) The third sentence of the second paragraph of section 10 of the Federal Reserve Act (12 U.S.C. 242) is amended to read as follows: "Of the persons thus appointed, one shall be designated by the President, by and with the advice and consent of the Senate, to serve as Chairman of the Board for a tenn of four years, and one shall be designated by the President, by and with the consent of the Senate, to serve as Vice Chairman of the Board for a term of four years.". Effective date. (b) The amendment made by subsection (a) takes effect on Jan- 12 u s e 242 note. uary 1, 1979, and applies to individuals who are designated by the President on or after such date to serve as Chairman or Vice Chair- man of the Board of Governors of the Federal Reserve System. CONFLICTS OF INTEREST SEC. 205. (a) Subsection 208(a) of title 18, United States Code, is amended by adding "a Federal Reserve bank director, officer, or employee," immediately before "or of the District of Columbia". (b) Subsection 208(b) of title 18, United States Code, is amended by adding the following new sentence at the end thereof: "In the case of class A and B directors of Federal Reserve banks, the Board of Governors of the Federal Reserve System shall be the Government official responsible for appointment.". REFERENCES TO FEDERAL RESERVE ACT PARAGRAPHS SEC. 206. References in this title to paragraphs of the Federal 12 use 226. Reserve Act refer to the paragraphs as designated in the compilation of the Federal Reserve Act as amended through 1974, compiled under the direction of the Board of Governors of the Federal Reserve System in its legal division. T I T L E III—AMENDMENTS TO T H E BANK HOLDING COMPANY ACT OF 1956 Acquired shares, SEC. 301. (a) Section 3(a) of the Bank Holding Company Act of disposition, time 1956 (12 U.S.C. 1842(a)) is amended by inserting after the second extension. sentence the following new sentence: "The Board is authorized upon application by a bank to extend, from time to time for not more than
PUBLIC LAW 95-188—NOV. 16, 1977 91 STAT. 1389 one year at a time, the two-year period referred to above for dispos- ing of any shares acquired by a bank in the regular course of securing or collecting a debt previously contracted in good faith, if, in the Board's judgment, such an extension would not be detrimental to the public interest, but no such extension shall in the aggregate exceed three years.". (b) Section 2(a) (5) (D) of such Act (12 U.S.C. 1841(a) (5) (D)) is amended by adding at the end thereof the following new sentence: "The Board is authorized upon application by a company to extend, from time to time for not more than one year at a time, the two-year period referred to herein for disposing of any shares acquired by a company in the regular course of securing or collecting a debt previ- ously contracted in good faith, if, in the Board's judgment, such an extension would not be detrimental to the public interest, but no such extension shall in the aggregate exceed three years.". (c) Section 4(c)(2) of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1843(c)(2)), is amended by striking out "shares acquired by a bank in satisfaction of a debt previously con- tracted in good faith, but such bank shall dispose of such shares within a period of two years" and inserting in lieu thereof the following: "'shares acquired by a bank holding company or any of its subsidiaries in satisfaction of a debt previously contracted in good faith, but such shares shall be disposed of within a period of two years". SEC. 302. Section 3(b) of the Bank Holding Company Act of 1956 Bank shares or (12 U.S.C. 1842) is amended to read as follows: assets, "(b) Upon receiving from a company any application for approval applications for under this section, the Board shall give notice to the Comptroller of acquisition. Notice to the Currency, if the applicant company or any bank the voting shares Comptroller of or assets of which are sought to be required is a national banking asso- the Currency or ciation or a District bank, or to the appropriate supervisory authority State supervisory of the interested State, if the applicant company or any bank the vot- authority. ing shares or assets of which are sought to be acquired is a State bank, Views and in order to provide for the submission of the views and recommenda- recommenda- tions of the Comptroller of the Currency or the State supervisory tions. authority, as the case may be. The views and recommendations shall be submitted within thirty calendar days of the date on which notice is given, or within ten calendar days of such date if the Board advises the Comptroller of the Currency or the State supervisory authority that an emergency exists requiring expeditious action. If the thirty- Disapproval. day notice period applies and if the Comptroller of the Currency or the State supervisory authority so notified by the Board disapproves the application in writing within this period, the Board shall forthwith give written notice of that fact to the applicant. Within three days Hearings. after giving such notice to the applicant, the Board shall notify in writing the applicant and the disapproving authority of the date for commencement of a hearing by it on such application. Any such hear- ing shall be commenced not less than ten nor more than thirty days after the Board has given written notice to the applicant of the action of the disapproving authority. The length of any such hearing shall be determined by the Board, but it shall afford all interested parties a reasonable opportunity to testify at such hearing. At the conclusion thereof, the Board shall, by order, grant or deny the application on
91 STAT. 1390 PUBLIC LAW 95-188—NOV. 16, 1977 Applications, the basis of the record made at such hearing. In the event of the f aihire nonaction of the Board to act on any application for approval under this section deemed approval. within the ninety-one-day period which begins on the date of submis- sion to the Board of the complete record on t h a t application, the appli- cation shall be deemed to have been granted. Notwithstanding any other provision of this subsection, if the Board finds t h a t it nmst act immediately on any application for approval under this section in order to j^revent the probable failure of a bank or bank holding com- pany involved in a proposed acquisition, merger, or consolidation trans- action, the Board may dispense with the notice requirements of this subsection, and if notice is given, the Board may request t h a t the views and recommendations of the Comptroller of the Currency or the State supervisory authoj'ity, as the case may be. be submitted immediately in any form or by any means acceptable to the Board. If the Board has found pui'snant to this subsection either" t h a t an emergency exists requiiing expeditious action or that it nmst act immediately to prevent probable failni-e. the l^oard may g r a n t or deny any such application without a hearing notwithstanding any recommended disapproval by the appropriate supervisory authoi'ity.". Acquisitions, SEC. 303. Section 11 (b) "of the I k n k Holding Company Act of 1966 -mergers, <ind (12 U.S.C. 1849) is amended to read as follows: consolidations. " ( b ) Tlie Board shall immediately notify the Attorney General of Notification to Attorney any approval by it pursuant to section 3 of a proposed acquisition, General. merger, or consolidation transaction. If the Board has found t h a t it 12 u s e 1842. must act immediately in order to prevent the probable failure of a bank or bank holding company involved in any such transaction, the trans- action may be consummated immediately upon approval by the Board. If the Board has advised tlie Comptroller of the (^urrency or the State supervisory authority, as the case may be, of the existence of an emer- gency requiring expeditious action and has required the submission of views and recommendations within ten days, the transaction may not be consumnuited before the fiftli calendar day after the date of approval by the Board. I n all other cases, the transaction may not be consum- mated before the thirtieth calendar day after the date of approval by Antitrust actions. the Board. Any action brought under the antitrust laws arising out of an acquisition, merger, or consolidation transaction approved under section 3 shall be commenced prior to the earliest time under this subsection at which the transaction approval under section 3 might be consummated. The commencement of such an action shall stay the effectiveness of the Board's approval unless the court shall otherwise specifically order. In any such action, the court shall review de novo the Judicial issues presented. In any judicial proceeding attacking any acquisition, standards. merger, or consolidation transaction approved pursuant to section 3 on the ground that such transaction alone and of itself constituted a violation of any antitrust laws other t h a n section 2 of the Act of eluly 2, 1890 (section 2 of the Sherman A n t i t r u s t Act, 15 U.S.C. 2 ) , the stand- ards applied by the court shall be identical with those t h a t the Board is directed to apply under section 3 of this Act. Upon the consummation of an acquisition, merger, or consolidation transaction approved under section 3 in compliance with this Act and after the termination of any antitrust litigation commenced within the period prescribed in this section, or upon the termination of such period if no such litigation is
PUBLIC LAW 95-188—NOV. 16, 1977 91 STAT. 1391 commenced therein, the transaction may not thereafter be attacked in any judicial proceeding on the ground that it alone and of itself con- stituted a violation of any antitrust laws other than section 2 of the Act of July 2, 1890 (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), but nothing in this Act shall exempt any bank holding company involved in such a transaction from complying with the antitrust laws after the consummation of such transaction,". Approved November 16, 1977, LEGISLATIVE HISTORY: HOUSE REPORT No. 95-774 (Comm. on Banking, Finance and Urban Affairs). CONGRESSIONAL RECORD, VoL 123 (1977): Oct. 31, considered and passed House. Nov. 1, considered and passed Senate, amended. Nov. 2, House concurred in Senate amendment. 29-194 0 - 8 0