[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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