[Congressional Record Volume 160, Number 145 (Tuesday, December 2, 2014)]
[House]
[Pages H8244-H8246]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         REGULATION D STUDY ACT

  Mr. LUETKEMEYER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 3240) to instruct the Comptroller General of the United 
States to study the impact of Regulation D, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3240

       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 ``Regulation D Study Act''.

     SEC. 2. GOVERNMENT ACCOUNTABILITY OFFICE STUDY.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a comprehensive study on the impact on 
     depository institutions, consumers, and monetary

[[Page H8245]]

     policy of the requirement that depository institutions 
     maintain reserves in accordance with subsections (b) and (c) 
     of section 19 of the Federal Reserve Act (12 U.S.C. 461) and 
     Regulation D (12 C.F.R. 204).
       (b) Matters To Be Studied.--In conducting the study under 
     this section, the Comptroller General shall include the 
     following:
       (1) An historic review of how the Board of Governors of the 
     Federal Reserve System has used reserve requirements to 
     conduct United States monetary policy, including information 
     on how and when the Board of Governors has changed the 
     required reserve ratio.
       (2) The impact of the maintenance of reserves on depository 
     institutions, including the operational requirements and 
     associated costs.
       (3) The impact on consumers in managing their accounts, 
     including the costs and benefits of the reserving system.
       (4) Alternatives the Board of Governors may have to the 
     maintenance of reserves to effect monetary policy.
       (c) Consultation.--In conducting the study under this 
     section, the Comptroller General shall consult with credit 
     unions and community banks.
       (d) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report containing--
       (1) the results of the study conducted pursuant to this 
     section; and
       (2) any recommendations based on such study.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Luetkemeyer) and the gentlewoman from Wisconsin (Ms. 
Moore) each will control 20 minutes.
  The Chair recognizes the gentleman from Missouri.


                             General Leave

  Mr. LUETKEMEYER. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days within which to revise and extend their 
remarks and submit extraneous materials for the Record on H.R. 3240, 
currently under consideration,
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. LUETKEMEYER. Mr. Speaker, I yield myself as much time as I may 
consume.
  I rise in support of H.R. 3240, the Regulation D Study Act, 
introduced by my friend from North Carolina (Mr. Pittenger), a 
colleague on the Financial Services Committee. This is a simple but 
important bill that directs the GAO to study the impact that the 
Federal Reserve's Regulation D minimum reserve requirements have on 
depository institutions, consumers, and monetary policy.
  Section 19 of the Federal Reserve Act gives the Federal Reserve 
authority to impose reserve requirements on the deposits of member 
institutions. These requirements are set forth in what is commonly 
referred to as Reg D.
  Regulation D reserve requirements are calculated as a percentage of 
the amount of funds a financial institution's members hold in 
transaction accounts. A transaction account is typically an account 
from which the depositor or account holder is permitted to make 
unlimited transfers or withdrawals, such as a checking account. Because 
balances in those accounts can change quickly, the Federal Reserve 
requires institutions to reserve funds for those accounts as a 
stabilizing tool for the money supply. Regulation D limits the number 
of transfers and withdrawals from nontransaction accounts to six per 
month.
  As legislators, it is important that we periodically review the 
impact of regulations on those whom we have the honor to represent. The 
Regulation D Study Act does just that, and I am pleased to support it.
  I reserve the balance of my time.
  Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
  I strongly, strongly support Representative Pittenger's Reg D Study 
Act. Again, as my colleague from Missouri has indicated, this is a 
technical bill, but it is extremely important.
  Commentators have argued that the maintenance of these reserves 
imposes opportunity costs on depository institutions, namely, by 
requiring them to hold funds in abeyance that could otherwise be lent 
out, and I think that it is worth GAO studying the issue and reporting 
back to Congress.
  I just want to make a point, Mr. Speaker, and to stress this: reserve 
requirements are separate and distinct from capital requirements, 
liquidity, and leverage rules, which protect the safety and soundness 
of the financial system. This bill does not take away those important 
protections.
  I reserve the balance of my time.
  Mr. LUETKEMEYER. Mr. Speaker, I yield as much time as he may consume 
to the gentleman from North Carolina (Mr. Pittenger), the sponsor of 
this legislation.
  Mr. PITTENGER. Mr. Speaker, I rise today in support of H.R. 3240, the 
Regulation D Study Act.
  This bill is simple. It directs the Government Accountability Office, 
GAO, to study the regulatory impact on depository institutions, 
consumers, and monetary policy.
  Current regulations limit common online and automated transfers and 
withdrawals from nontransaction accounts, such as savings accounts, to 
only six transfers per month. The regulators who created this rule 
never envisioned online banking and modern banking technology, and 
because only some transactions are subject to the six-per-month 
restriction and others are without limit, this rule is very confusing 
to consumers.
  Today, many families use online banking tools to actively manage 
their finances with unnecessary restrictions from these outdated rules. 
Regulation D requirements force financial institutions to focus on 
compliance concerns rather than spending more time with consumers to 
meet their financial needs.
  This is commonsense legislation that is not only good for financial 
institutions, but for American families as well. The issue of allowing 
only six transfers per month for certain bank accounts hasn't been 
reviewed in several decades. With new technological advancements and 
online banking, we owe it to our hardworking American families to 
revisit this regulation.
  H.R. 3240 enjoys support from the Credit Union National Association 
and the National Association of Federal Credit Unions, whose financial 
institutions serve millions of Americans.
  Mr. Speaker, I will submit for the Record a letter of support from 
the president of the Credit Union National Association, which serves 
100 million members across the country.

                                                      Credit Union


                                         National Association,

                                 Washington, DC, December 1, 2014.
     Hon. John Boehner,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Boehner and Leader Pelosi: On behalf of the 
     Credit Union National Association (CUNA), I am writing in 
     support of H.R. 3240, bipartisan legislation scheduled for 
     consideration this week by the House of Representatives. CUNA 
     is the largest credit union advocacy organization in the 
     United States, representing America's state and federally 
     chartered credit unions and their 100 million members.
       H.R. 3240, sponsored by Representatives Robert Pittenger 
     (R-NC) and Carolyn Maloney (D-NY), directs the Government 
     Accountability Office (GAO) to study the impact of the 
     Federal Reserve Board's monetary reserve requirements, 
     implemented through Regulation D, on depository institutions, 
     consumers and monetary policy. The House Financial Services 
     Committee favorably reported this bill to the House on July 
     20, 2014 by voice vote.
       Regulation D impacts credit union members by limiting the 
     number of automatic withdrawals from a member's savings 
     account to six transactions per month. The impact of this 
     limit is to unnecessarily cause credit union members to 
     overdraft their checking accounts when a debit draws the 
     checking account balance below zero and the member has 
     already had six automatic transfers during the month. When 
     this happens, members who may have the funds in a savings 
     account to cover the debit are hit with nonsufficient fund 
     fees (NSF) from their financial institution and, when a check 
     is involved, a returned check fee from the merchant. This is 
     not a result of an overdraft protection program--this happens 
     because of a regulatory cap on automatic transfers. It is 
     difficult for credit union members affected by the cap to 
     understand that this is out of the control of the credit 
     union when the funds to cover the debit are sifting in their 
     account at the credit union.
       We believe the cap should be increased or eliminated, but 
     we understand that one of the reasons the regulation is in 
     place is because the Federal Reserve Board is authorized to 
     use it as a tool to conduct monetary policy. As a first step 
     toward a possible change in this cap, the legislation directs 
     the GAO to study the issue. This effort will make more 
     information available for Congress to determine whether an 
     increase in or the elimination of this cap would 
     substantially affect the Federal Reserve Board's ability to 
     conduct monetary policy.
       Specifically, H.R. 3240 directs the GAO to examine and 
     report within one year of enactment on the following topics: 
     an historic

[[Page H8246]]

     overview of how the Federal Reserve Board has used reserve 
     requirements to conduct monetary policy; the impact of the 
     maintenance of reserves on depository institutions, including 
     the operations requirements and associated costs; the impact 
     on consumers in managing their accounts, including the costs 
     and benefits of the reserving system; and, alternatives to 
     required reserves the Federal Reserve Board may have to 
     effect monetary policy. The bill also directs the GAO to 
     consult with credit unions and community banks.
       According to former Federal Reserve Board Chairman Ben 
     Bernanke, ``. . . reserve balances far exceed the level of 
     reserve requirements and the level of reserve requirements 
     thus plays only a minor role in the daily implementation of 
     monetary policy.'' A GAO study will allow an objective 
     assessment of whether the rarely changed monetary reserves 
     imposed on depository institutions and consumers are 
     necessary in order for the Federal Reserve Board to implement 
     monetary policy in the 21st century. CUNA strongly supports 
     this bill.
       On behalf of America's credit unions and their 100 million 
     members, thank you for scheduling H.R. 3240 for 
     consideration. We look forward to working with you and 
     members of the House of Representatives to swiftly enact this 
     legislation.
           Sincerely,
                                                       Jim Nussle,
                                                  President & CEO.

  Mr. PITTENGER. As technology advances, we need to make sure Federal 
regulations keep pace. Former Federal Reserve Chairman Bernanke has 
said that account ``reserve balances far exceed the level of reserve 
requirements, and the level of reserve requirements thus plays only a 
minor role in the daily implementation of monetary policy.''
  We can continue to protect the financial system while allowing 
families more flexibility to use online banking tools.
  This legislation has strong bipartisan support, and I would like to 
thank my colleague from New York, Congresswoman Maloney, who serves on 
the Financial Services Committee, for joining me in introducing H.R. 
3240.
  A GAO study will allow an objective assessment of whether the rarely 
changed monetary reserves imposed on depository institutions and 
consumers are necessary in order for the Federal Reserve to implement 
monetary policy in the 21st century.
  Ms. MOORE. Mr. Speaker, I am absolutely delighted to yield such time 
as she might consume to the gentlelady from New York (Mrs. Carolyn B. 
Maloney), the Democratic cosponsor of this bill, who is the ranking 
member of the Capital Markets Subcommittee.
  Mrs. CAROLYN B. MALONEY of New York. I thank the gentlelady for her 
leadership and for yielding.
  Mr. Speaker, I rise today in support of H.R. 3240. I am pleased to 
have worked on this bill with my colleague from North Carolina (Mr. 
Pittenger). I would also like to take this opportunity to compliment 
his work on attempting to end terrorism, cracking down on terrorism 
financing in our country.
  The purpose of this particular bill is to study the current monthly 
limits, under Regulation D, on the number of automatic withdrawals from 
a consumer's savings account.

                              {time}  1415

  Currently Regulation D limits the number of automatic withdrawals 
from a consumer's account to six per month. This means that if a 
consumer has already hit his limit on automatic withdrawals for the 
month and then overdrafts his or her checking account, the bank won't 
transfer money from his savings account to cover the overdraft, and 
this results in an unnecessary overdraft fee.
  As two recent studies by the Consumer Financial Protection Bureau 
have noted, overdraft fees disproportionately harm those of us who can 
least afford it. Unsophisticated consumers are most hit by them. So if 
there is a regulation that is causing unnecessary overdraft fees, we 
should study whether that regulation is necessary. That is what our 
commonsense bill does. It asks the GAO to study the limitation in 
Regulation D to determine if it is, in fact, useful or harmful.
  This bill is supported by many stakeholders in financial services: 
the Credit Union National Association, the National Association of 
Federal Credit Unions, and the American Bankers Association.
  Mr. Speaker, I urge my colleagues to support this commonsense bill, 
and I appreciate the help of my colleague.
  Ms. MOORE. Mr. Speaker, I have no further requests for speakers, so I 
yield back the balance of my time.
  Mr. LUETKEMEYER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Missouri (Mr. Luetkemeyer) that the House suspend the 
rules and pass the bill, H.R. 3240.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. LUETKEMEYER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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