Monetary Control Act
Categories: Econ, Regulations
The Monetary Control Act of 1980 really shook things up in the financial world. While the legislation did increase the rules for Federal Reserve member banks (sad face for them), it widely deregulated commercial banks (happy face for them) and gave them more rules, like more reserve requirements (money they have to keep on hand rather than loan out).
For example, interest rates that used to be regulated by the Glass-Steagall Act were now no longer subject to federal examination. While that might sound bad for consumers, one good thing for consumers that came out of the Monetary Control Act was higher FDIC insurance protection. FDIC insurance rose to $100k per bank account, a high promise coming from the previous $40k protection.
The new rules for Federal Reserve member banks made them be treated more like regular old commercial banks. Before the Monetary Control Act, Fed member banks got a lot of perks (think: free services like wire transfers and check-clearing), but afterwards, nothing was free—charges for member banks, just like non-member banks.