Bailout Bill UNCOVERED: Will Allow Banks to Have Zero Deposit Requirement
-- Posted Thursday, 2 October 2008 | Digg This Article | Source: GoldSeek.com
Buried in the bailout bill under consideration has a provision that would accelerate the Relief Act of 2006 effect date of October 1, 2011 which will allow banks to have a Zero Deposit Requirement, should the Federal Reserve Board find it suitable. The bailout bill up for vote would move the effective date to October 1, 2008.
Each depository institution shall maintain reserves against its transaction accounts as the Board may prescribe by regulation solely for the purpose of implementing monetary policy— (i) in a ratio of not greater than 3 percent (and which may be zero) for that portion of its total transaction accounts of $25,000,000 or less, subject to subparagraph (C); and (ii) in the ratio of 12 per centum, or in such other ratio as the Board may prescribe not greater than 14 per centum and which may be zero, for that portion of its total transaction accounts in excess of $25,000,000, subject to subparagraph (C). "
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16 SEC. 128. ACCELERATION OF EFFECTIVE DATE. 17 Section 203 of the Financial Services Regulatory Re- 18 lief Act of 2006 (12 U.S.C. 461 note) is amended by strik- 19 ing ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.
'According to my research of the Financial Services Regulatory Relief Act of 2006 this would mean that effective immediately the Federal Reserve Act would be amended to: (1) authorize payment of interest on funds maintained by a depository institution at a Federal Reserve bank; and (2) authorize the Federal Reserve Board to reduce to 0% the reserves required to be maintained by a depository institution against its transaction accounts. (The current requirement ranges from 3% to 14%.)'
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