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COMMITTEE ON
BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

NINETY-SIXTH CONGRESS

FIRST SESSION

ON

S. 1347

TO PROVIDE IMPROVED CONSUMER SERVICES AND TO
STRENGTHEN THE ABILITY OF FINANCIAL INSTITUTIONS

TO ADJUST TO CHANGING ECONOMIC CONDITIONS

PART I

JUNE 21, 1979

UNIVERSITY

Printed for the use of
Committee on Banking, Housing,

Serban Affairs

MAY 19.90

GOV'T

DEPARTMENT

DOCUMENT

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1979

47-823 O

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

WILLIAM PROXMIRE, Wisconsin, Chairman HARRISON A. WILLIAMS, JR., New Jersey JAKE GARN, Utah ALAN CRANSTON, California

JOHN TOWER, Texas ADLAI E. STEVENSON, Illinois

JOHN HEINZ, Pennsylvania ROBERT MORGAN, North Carolina

WILLIAM L. ARMSTRONG, Colorado DONALD W. RIEGLE, JR., Michigan

NANCY LANDON KASSEBAUM, Kansas PAUL S. SARBANES, Maryland

RICHARD G. LUGAR, Indiana
DONALD W. STEWART, Alabama
PAUL E. TSONGAS, Massachusetts

KENNETH A. McLEAN, Staff Director
M. DANNY WALL, Minority Staff Director

CHARLES L. MARINACCIO, Special Counsel
ANTHONY T. CLUFF, Assistant Minority Staff Director

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

ALAN CRANSTON, California, Chairman WILLIAM PROXMIRE, Wisconsin

JOHN TOWER, Texas ADLAI E. STEVENSON, Illinois

JAKE GARN, Utah ROBERT MORGAN, North Carolina

JOHN HEINZ, Pennsylvania DONALD W. STEWART, Alabama

WILLIAM L. ARMSTRONG, Colorado CAROLYN JORDAN, Counsel

(11)

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Opening statement of:

President Carter

Senator Cranston

Senator Proxmire

Senator Stevenson.

Senator Gravel.

Senator Morgan

Senator Tower.

Bill S. 1347

Thomas J. McIntyre, Sullivan & Worcester, former U.S. Senator from the State

of New Hampshire

Prepared statement

Consumers Financial Services Act of 1977, Senate Report No. 95–407

Banking must be brought out of the 1930's.

Financial services jeopardized by ruling of U.S. Court of Appeals

Ceilings on NOW accounts

S. & Li's cornerstone in housing industry

Elimination of ceiling rate on NOW accounts.

Effect on small consumer

S. & L. conversions

W. Michael Blumenthal, Secretary of the Treasury

Prepared statement

U.S. Court of Appeals for the District of Columbia Circuit, Order and

Adjudgement ....

Present system of deposit rate control does not work

Interest rate differential remains in favor of thrift institutions

Variable rate mortgages ..

Suggestion that Court of Appeals decision be delayed

Continued rapid rising interest rates if legislation is not enacted

Interest on transaction accounts versus passbook accounts

Interest on reserve requirements

S. 1347 should move independently

Present regulation Q situation unfair to small depositors......

Respect the dual system of banking

S. & L.'s finance 80 percent of homes in the United States

Encouragement of savings can defeat inflation

Unable to have a complete free marketplace

Leland S. Prussia, vice chairman of the board, Bank of America, San Francisco,

Calif...

Prepared statement

Richard Dugger, president, Ashuelot National Bank, Keene, H. H

Prepared statement

Herbert Gray, president, Suffolk Franklin Savings Bank, Boston, Mass.

Prepared statement.

George Campbell, senior vice president, Union Federal Savings, Pittsfield,

Mass ....

Prepared statement

77SU

XL

8270

Page

137 202

128 131 132

Howard Walsh, president, First Federal Savings & Loan of Nashua, Nashua,

N.H....
Prepared statement
Interest rate ceilings violate the criteria of fairness recommend phaseout of

regulation Q to start earlier....
Reform legislation to benefit millions of Americans..
NOW account is a good deal for consumer who can afford it.
Failure of scheduled phaseout could cause public loss of confidence in all

financial institutions
NOW accounts should be introduced on a nationwide basis
Tax exemption for senior citizen savers
Everything has to have its price
Asset powers....
8. & L.'s competitive advantage by having NOW accounts is false
Money made on NOW accounts
Inflationary situation very serious
Legislation will give savers a bigger reward

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DEPOSITORY INSTITUTIONS DEREGULATION

ACT OF 1979

THURSDAY, JUNE 21, 1979

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, SUBCOMMITTEE ON FINANCIAL INSTITUTIONS,

Washington, D.C. The subcommittee met at 9:35 a.m. in room 5302 of the Dirksen Senate Office Building, Senator William Proxmire, chairman of the full committee, and Senator Alan Cranston, chairman of the subcommittee, presiding.

Present: Senators Proxmire, Cranston, Morgan, Garn, and Tower.

Senator PROXMIRE. The committee will come to order.

Unfortunately, the chairman of the subcommitee, Senator Cranston, is delayed. And I ask unanimous consent that his statement be inserted in full in the record as if read. [Senator Cranston's statement follows:]

OPENING STATEMENT OF SENATOR CRANSTON Senator CRANSTON. This morning the Finanical Institutions Subcommittee will begin its inquiry into the Depository Institutions Deregulation Act of 1979.

Twice in the past in 1975 and again in 1977, the Senate has approved similar financial reform legislation under the strong and diligent initiatives of Senator McIntyre who is appearing before us today as a witness. It is indeed a pleasure to have you with us today.

It is quite clear from the hearings we have held in the past that there is widespread agreement that we are moving in the right direction with financial reform. We need a comprehensive plan to restructure financial institutions so that they can be more competitive and responsive to technological, social, and marketplace changes that they now face. Additionaly

, it is quite clear that the proh facing 11 all saver cannot be completely addressed wi' york

Those problems can only be resolved by

onsumers can receive and finan-
eturn on their deposits.

will in the long run be benefi-
ns that serve them by making
ful and deliberate approach to
blems in our financial system
lities of the problems that ar

to this transition period.

Iraft and

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