2:08 PM EST

Blaine Luetkemeyer, R-MO 3rd

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.

2:09 PM EST

Gwen Moore, D-WI 4th

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.

2:09 PM EST

Gwen Moore, D-WI 4th

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.

2:09 PM EST

Gwen Moore, D-WI 4th

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.

2:11 PM EST

Robert Pittenger, R-NC 9th

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.

2:11 PM EST

Robert Pittenger, R-NC 9th

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.

2:14 PM EST

Carolyn Maloney, D-NY 12th

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: 14:15]

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.

2:14 PM EST

Carolyn Maloney, D-NY 12th

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: 14:15]

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.