WASHINGTON (10/7/13)--The Credit Union National Association has thrown its support behind a new bill introduced by Reps. Robert Pittenger (R-N.C.) and Carolyn Maloney (D-N.Y.). The legislation would order the U.S. Government Accountability Office (GAO) to study the impact of the Federal Reserve Board's monetary reserve requirements on depository institutions, consumers and monetary policy.
The reserve requirements are implemented by the Fed's Regulation D, and the new bill (H.R. 3240) is entitled, the "Regulation D Study Act." Credit unions became subject to monetary reserves in 1980.
CUNA supports improvements to Regulation D, such as increasing the number of automatic transfers allowed from a member's savings to share accounts and has testified before the U.S. Congress in support of such changes.
In a letter Friday, CUNA President/CEO Bill Cheney wrote, "Regulation D impacts credit union members by limiting by regulation (rather than as a business decision of the credit union) the number of withdrawals from a member's savings account to six transactions per month."
Calling the introduction of H.R. 3240 "timely," Cheney wrote, "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 Fed to implement monetary policy in the 21st century."
The bill instructs the GAO to consult with credit unions and community banks as it examines, and reports within one year of enactment, on the following:
An historic overview of how the Fed 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 Fed may have to effect monetary policy.