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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2990 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2990

 To create a full employment economy as a matter of national economic 
defense; to provide for public investment in capital infrastructure; to 
 provide for reducing the cost of public investment; to retire public 
 debt; to stabilize the Social Security retirement system; to restore 
 the authority of Congress to create and regulate money, modernize and 
provide stability for the monetary system of the United States; and for 
                         other public purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 2011

  Mr. Kucinich (for himself and Mr. Conyers) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
 To create a full employment economy as a matter of national economic 
defense; to provide for public investment in capital infrastructure; to 
 provide for reducing the cost of public investment; to retire public 
 debt; to stabilize the Social Security retirement system; to restore 
 the authority of Congress to create and regulate money, modernize and 
provide stability for the monetary system of the United States; and for 
                         other public purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Emergency Employment 
Defense Act of 2011''.

SEC. 2. FINDINGS; PURPOSES.

    (a) Findings.--The Congress finds as follows:
            (1) Nearly 14,000,000 Americans are currently unemployed, 
        another 12,000,000 estimated Americans are underemployed, wages 
        are stagnant and millions of Americans are being asked to take 
        pay cuts.
            (2) Over 43,000,000 Americans live below the poverty line, 
        49,000,000 of Americans go to bed hungry at night, and an 
        estimated 3,000,000 Americans are homeless.
            (3) Over 1,500,000 non-business bankruptcies were filed in 
        calendar year 2010, the highest number in five years, and the 
        index of small business optimism is at a low not seen in nearly 
        two decades.
            (4) More than 2,000,000 homes are in foreclosure and 
        millions of homeowners are falling behind in their mortgage 
        payments; the housing market in terms of construction and sales 
        has undergone an historic decline; and the declining value of 
        housing means Americans' largest single investment, the home, 
        is no longer a safe harbor for savings, nest eggs, social 
        mobility or the transfer of generational wealth.
            (5) Notwithstanding passage of the Patient Protection and 
        Affordable Care Act, a privatized health care system has made 
        quality health care beyond the reach of most Americans.
            (6) The cost of higher education has put higher academic 
        attainment outside the reach of millions more young Americans, 
        and the current generation of young Americans will not be able 
        to attain the quality of life of their parents, reversing a 
        long-standing trend.
            (7) The American Society of Civil Engineers has estimated 
        that there is $2.2 trillion in unmet infrastructure needs. 
        Cities and States, urban and rural areas all have an urgent 
        need to rebuild and repair roads, bridges, railroads, water 
        systems, sewer systems and other infrastructure but lack the 
        necessary funds, bond-issuing capacity and other needs which 
        has led to America's infrastructure falling into disrepair.
            (8) The Board of Governors of the Federal Reserve System 
        have compounded the economic crisis by failing to take decisive 
        action to move the economy forward, Wall Street, which was 
        bailed out by the American people, is not investing its rising 
        assets in Main Street America, and individual investors are 
        beginning to turn away from the stock market.
            (9) Some banks, many of which received government bailouts, 
        are not investing in small businesses, nor in the creation of 
        jobs, the private sector is not creating jobs, and in fact most 
        businesses are freezing their employment levels.
            (10) Congress is stymied by competing forces: a desire to 
        put people to work and an aversion to borrowing money to create 
        programs to do so.
            (11) Confidence in the United States' economic leadership 
        at home and around the world is waning, the value of our 
        currency cannot be securely maintained, and no other path to 
        economic recovery exists which will create the changes 
        necessary to put people back to work, invest in rebuilding 
        America's infrastructure, i.e. highway, rail, airport, harbors, 
        light rail, communication, shipping, water, sewer, education, 
        and civil defense.
            (12) The aforementioned conditions require comprehensive 
        action by the United States Congress to create full employment, 
        invest in America and secure our Nation's long-term economic, 
        social and political future; and that such action is within our 
        Constitutional right and responsibility.
            (13) The authority to create money is a sovereign power 
        vested in the Congress under Article I, Section 8 of the 
        Constitution.
            (14) The enactment of the Federal Reserve Act in 1913 by 
        Congress effectively delegated the sovereign power to create 
        money, to the Federal Reserve system and private financial 
        industry.
            (15) This ceding of Constitutional power has contributed 
        materially to a multitude of monetary and financial 
        afflictions, including:
                    (A) growing and unreasonable concentration of 
                wealth;
                    (B) unbridled expansion of national debt, both 
                public and private;
                    (C) excessive reliance on taxation of citizens for 
                raising public revenues;
                    (D) devaluation of the currency;
                    (E) drastic increases in the cost of public 
                infrastructure investments;
                    (F) record levels of unemployment and 
                underemployment; and
                    (G) persistent erosion of the ability of Congress 
                to exercise its Constitutional responsibilities to 
                provide resources for the general welfare of all the 
                American people.
            (16) A debt-based monetary system, where money comes into 
        existence primarily through private bank lending, can neither 
        create, nor sustain, a stable economic environment, but has 
        proven to be a source of chronic financial instability and 
        frequent crisis, as evidenced by the near collapse of the 
        financial system in 2008.
            (17) Banks increased their value by lending money 
        imprudently, which greatly inflated the value of bank holdings, 
        exposing depositors and taxpayers to the risks of schemes like 
        the bundling of subprime mortgages, and ultimately bringing 
        undercapitalized banks and the entire financial system to the 
        edge of ruin, creating circumstances where the taxpayers of the 
        United States were called upon to save the banks from their own 
        imprudent lending practices, misspending and mis-investments. 
        The banks' ability to create money out of nothing ultimately 
        became the taxpayers' liability, and raises a fundamental 
        question about a practice of money creation which threatens the 
        wealth of the American people.
            (18) Abolishing private money creation can be achieved with 
        minimal disruption to current banking operations, regulation, 
        and supervision.
            (19) The creation of money by private financial 
        institutions as interest-bearing debts should cease once and 
        for all.
            (20) Reclaiming the power of the Federal Government to 
        originate money, and to spend or lend money into circulation as 
        needed, eliminates the need to treat money as a Federal 
        liability or to pay interest charges on the Nation's money 
        supply to financial institutions; it also removes the undue 
        influence of private financial institutions over public policy.
            (21) Under the current Federal Reserve System, the persons 
        responsible for the conduct of United States monetary policy 
        have been unaccountable to the Congress and the Nation, have 
        resisted auditing by the Government Accountability Office, and 
        have claimed exemptions from some Federal statutes, including 
        the Civil Rights Act of 1964, that apply to all agencies of the 
        Federal Government.
            (22) The implementation of United States monetary policy by 
        the Board of Governors of the Federal Reserve System has failed 
        to promote full employment, and the failure of the Board of 
        Governors to safeguard the financial system against wholesale 
        fraud and abuse of citizens, demonstrates the risks of 
        maintaining a system wherein the power to create and regulate 
        money has been delegated to private individuals who are 
        unaccountable to the People of the United States in any way, 
        even through their representatives in Congress.
            (23) An examination of the historical record demonstrates 
        that the exercise of control by the United States Government 
        over the money system has provided greater moderation in the 
        supply of money and promoting the general welfare, and has been 
        indispensable in times of national emergency for generating 
        resources required to support public investment, provide for 
        national defense, and promote the general welfare, and is 
        therefore superior to private control over the money system.
            (24) As our money system is a key pillar in maintaining 
        general economic welfare and as the Federal Reserve System and 
        its private banking partners has consistently failed to promote 
        or preserve the general welfare, it is essential that Congress, 
        in the name of protecting the economic lives of the American 
        people and the long-term security of our Nation, reassume the 
        powers and responsibilities granted to it by the Constitution.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To create a Monetary Authority which shall pursue a 
        monetary policy based on the governing principle that the 
        supply of money in circulation should not become inflationary 
        nor deflationary in and of itself, but will be sufficient to 
        allow goods and services to move freely in trade in a balanced 
        manner. The Monetary Authority shall maintain long run growth 
        of the monetary and credit aggregates commensurate with the 
        economy's long run potential to increase production, so as to 
        promote effectively the goals of maximum employment, stable 
        prices, and moderate long-term interest rates.
            (2) To create a full employment economy as a matter of 
        national economic defense; to provide for public investment in 
        capital infrastructure; to provide for reducing the cost of 
        public investment; to retire public debt; to stabilize the 
        Social Security retirement system; to restore the authority of 
        Congress to create and regulate money, to modernize and provide 
        stability for the monetary system of the United States, and for 
        other public purposes.
            (3) To abolish the creation of money, or purchasing power, 
        by private persons through lending against deposits, by means 
        of fractional reserve banking, or by any other means.
            (4) To enable the Federal Government to invest or lend new 
        money into circulation as authorized by Congress and to provide 
        means for public investment in capital infrastructure.
            (5) To incorporate the Federal Reserve System into the 
        Executive Branch under the United States Treasury, and to make 
        other provisions for reorganization of the Federal Reserve 
        System.
            (6) To provide for an orderly transition.
            (7) To make other provisions necessary to accomplish the 
        purposes of this Act.

SEC. 3. DEFINITIONS.

    (a) In General.--For purposes of this Act, the following 
definitions shall apply:
            (1) Bureau.--The term ``Bureau'' means the Bureau of the 
        Federal Reserve established under section 314 of title 31, 
        United States Code, as added by section 303.
            (2) Deposit.--The term ``deposit''--
                    (A) has the meaning given such term in section 3(l) 
                of the Federal Deposit Insurance Act); and
                    (B) includes--
                            (i) a member account (as defined in section 
                        101(5) of the Federal Credit Union Act) in a 
                        credit union; and
                            (ii) any transaction account.
            (3) Depository institution.--The term ``depository 
        institution''--
                    (A) has the same meaning as in section 3 of the 
                Federal Deposit Insurance Act; and
                    (B) includes any credit union (as defined in 
                section 101 of the Federal Credit Union Act).
            (4) Instrument of indebtedness of the united states; 
        treasury instruments.--The terms ``instrument of indebtedness 
        of the United States'' and ``Treasury instrument'' include any 
        obligation issued under subchapter I of chapter 31 of title 31, 
        United States Code.
            (5) Member bank.--The term ``member bank'' has the same 
        meaning as in the first section of the Federal Reserve Act.
            (6) Money.--The term ``money'' refers to United States 
        Money, as established under title I.
            (7) Monetary authority.--The term ``Monetary Authority'' 
        means the Monetary Authority established under section 302.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (9) State.--The term ``State'' has the same meaning as in 
        section 3 of the Federal Deposit Insurance Act.
            (10) Effective date.--The term ``effective date'' means the 
        date determined and published in the Federal Register by the 
        Secretary, during the 90-day period beginning on the date of 
        the enactment of this Act, that--
                    (A) is not less than 1 year after such date of 
                enactment and not more than 2 years after such date; 
                and
                    (B) is the date on which the designated provisions 
                of this Act take effect.
    (b) Technical and Conforming Amendment to the FDIA.--Section 3(l) 
of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)) is amended by 
adding at the end the following:
    ``Such term does not include any amount on which any interest is 
paid or which is received or held by a bank or savings association 
pursuant to a loan agreement for a fixed term of time (as determined 
without regard to any designation on the agreement as a loan, 
certificate, or other particular instrument).''.

SEC. 4. COORDINATION WITH OTHER LAW.

    (a) In General.--This Act shall supersede any provision of Federal 
law in effect on the day before the date of the enactment of this Act 
that is inconsistent with any provision of this Act but only to the 
extent of such inconsistency.
    (b) Technical and Conforming Amendments.--Before the end of the 6-
month period beginning on the date of the enactment of this Act, the 
Secretary of the Treasury shall submit to the Congress a proposed draft 
of legislation of the Monetary Authority that, if enacted, would 
implement such technical and conforming amendments as the Monetary 
Authority may recommend--
            (1) to repeal the provisions of law referred to in 
        subsection (a) that are inconsistent with this Act; and
            (2) to further clarify and implement the provisions of this 
        Act.

              TITLE I--ORIGINATION OF UNITED STATES MONEY

SEC. 101. EXERCISE OF CONSTITUTIONAL AUTHORITY TO CREATE MONEY.

    (a) In General.--Pursuant to the exercise by the Congress of the 
authority contained in the 5th clause of section 8 of Article I of the 
Constitution of the United States of America--
            (1) the authority to create money within the United States 
        shall hereafter reside exclusively with the Federal Government; 
        and
            (2) the money so created shall be known as United States 
        Money and denominated and expressed as provided in section 5101 
        of title 31, United States Code.
    (b) Exercise of Sovereign Power.--The creation of United States 
Money under this Act is the legal expression of the sovereign power of 
the Nation and confers upon its bearer an unconditional means of 
payment.
    (c) Limitation on Expression.--Beginning on the effective date--
            (1) only the coin, notes, or other forms of legal tender, 
        including electronic currency, originated by the United States 
        Treasury under the authority of this Act shall be deemed as 
        United States money; and
            (2) it shall be unlawful for any person to designate any 
        credit, note, bond, script or other financial instrument as 
        United States Money.

SEC. 102. UNLAWFUL FOR PERSONS TO CREATE MONEY.

    Any person who creates or originates United States money by lending 
against deposits, through so-called fractional reserve banking, or by 
any other means, after the effective date shall be fined under title 
18, United States Code, imprisoned for not more than 5 years, or both.

SEC. 103. PRODUCTION OF UNITED STATES MONEY.

    (a) Commencing Full Production of United States Currency.--Section 
5115 of title 31, United States Code, is amended by striking 
subsections (a) and (b) and inserting the following new subsections:
    ``(a) In General.--In order to furnish suitable notes for 
circulation as United States money, the Secretary of the Treasury shall 
cause plates and dies to be engraved in the best manner to guard 
against counterfeits and fraudulent alterations, and shall have printed 
therefrom and numbered such quantities of such notes of the same 
denominations as are currently issued.
    ``(b) Form and Tenor.--United States currency notes for circulation 
as United States money shall be in form and tenor as directed by the 
Secretary of the Treasury.''.
    (b) Ceasing Production of Federal Reserve Notes.--The Secretary of 
the Treasury shall wind-down and cease production of Federal reserve 
notes under the 8th undesignated paragraph of section 16 of the Federal 
Reserve Act (12 U.S.C. 418) as quickly as practicable after the date of 
the enactment of this Act, but no later than the effective date, in 
coordination with the start-up and maintenance of production of United 
States currency under section 5115 of title 31, United States Code. The 
Secretary shall ensure that at all times the amount of Federal Reserve 
notes in circulation is sufficient to meet demand until the production 
of United States currency is sufficient to meet such demand.
    (c) Continuing Circulation Until Retirement.--Any Federal Reserve 
notes in circulation shall continue to be legal tender until retired in 
accordance with applicable provisions of law.

SEC. 104. LEGAL TENDER.

    (a) In General.--United States Money shall enter into general 
domestic circulation as full legal tender in payment of all debts 
public and private.
    (b) Technical and Conforming Amendment.--Section 5103 of title 31, 
United States Code, is amended by striking ``(including Federal reserve 
notes and circulating notes of Federal reserve banks and national 
banks)'' and inserting ``in the form of United States Money''.

SEC. 105. DISBURSEMENTS TO BE DENOMINATED IN UNITED STATES MONEY.

    On the effective date, all United States Government disbursements 
shall be denominated in United States Money, the unit being the dollar, 
symbolized as $.

SEC. 106. ORIGINATION IN LIEU OF BORROWING.

    (a) In General.--After the effective date, and subject to 
limitations established by the United States Monetary Authority under 
provisions of section 302, the Secretary shall originate United States 
Money to address any negative fund balances resulting from a shortfall 
in available Government receipts to fund Government appropriations 
authorized by Congress under law.
    (b) Prohibition on Government Borrowing.--After the effective date, 
unless otherwise provided by an Act of the Congress enacted after such 
date--
            (1) no amount may be borrowed by the Secretary from any 
        source; and
            (2) no amount may be borrowed by any Federal agency or 
        department, any independent establishment of the executive 
        branch, or any other instrumentality of the United States 
        (other than a national bank, Federal savings association, or 
        Federal credit union) from any source other than the Secretary.
    (c) Rule of Construction.--No provision of this Act shall be 
construed as preventing the Congress from exercising its constitutional 
authority to borrow money on the full faith and credit of the United 
States.
    (d) Technical and Conforming Amendment.--On the effective date, 
chapter 31 of title 31, United States Code, is hereby repealed, subject 
to the retirement of outstanding instruments of indebtedness of the 
United States in accordance with section 401.

SEC. 107. RETIREMENT OF INSTRUMENTS OF INDEBTEDNESS.

    Before the effective date, the Secretary shall commence to retire 
all outstanding instruments of indebtedness of the United States by 
payment in full of the amount legally due the bearer in United States 
Money, as such amounts become due.

SEC. 108. ACCOUNTING.

    (a) In General.--The Secretary shall account for the disbursement 
of United States Money and of current fund balances through accounting 
reports maintained and published by the Secretary and by departments 
and agencies of the United States Government.
    (b) GAO Audit.--The Comptroller General of the United States shall 
conduct an independent biennial audit.

        TITLE II--ENTRY OF UNITED STATES MONEY INTO CIRCULATION

SEC. 201. ENTRY OF UNITED STATES MONEY INTO CIRCULATION.

    The Secretary shall cause United States Money to enter into 
circulation by and through any of the following means:
            (1) Any origination or disbursement of funds to accomplish 
        Federal expenditures authorized and appropriated by an Act of 
        the Congress.
            (2) Any disbursement to retire outstanding instruments of 
        indebtedness of the Federal Government or the Secretary of the 
        Treasury as such instruments become due.
            (3) Any contribution authorized by an Act of the Congress 
        subject to any limitation established by the Monetary Authority 
        to the Revolving Fund established in section 302 of this Act.
            (4) Any action provided for in the transitional 
        arrangements specified in title IV of this Act, including the 
        conversion of all deposits in transaction accounts into United 
        States Money.
            (5) Any exercise of ``lender of last resort'' emergency 
        authorities under the emergency procedures specified in section 
        305.
            (6) Any purchase of stock in a Federal reserve bank from a 
        member bank and of any other assets as prescribed under the 
        Federal Reserve Act as required to accomplish the purposes of 
        section 301.
            (7) Any other means, and for any other purpose explicitly 
        authorized by an Act of the Congress that becomes law after the 
        effective date of this Act.

        TITLE III--RECONSTRUCTION OF THE FEDERAL RESERVE SYSTEM

SEC. 301. RECONSTITUTION OF THE FEDERAL RESERVE.

    (a) Government Acquisition of All Net Assets of Federal Reserve 
System.--On the effective date, the Secretary shall purchase on behalf 
of the United States all net assets in the Federal Reserve System, 
including the Federal reserve banks, according to the rules specified 
in the Federal Reserve Act (12 U.S.C. 288) for this purpose.
    (b) Repayment of Reserves.--Any reserves of any member bank that is 
held by any Federal reserve bank shall be returned to the member bank 
in the form of United States Money, subject to the provisions contained 
in sections 401 and 402(b).

SEC. 302. ESTABLISHMENT OF THE UNITED STATES MONETARY AUTHORITY.

    (a) Monetary Authority.--
            (1) Establishment.--
                    (A) In general.--There is hereby established the 
                Monetary Authority as an authority within the 
                Department of the Treasury under the general oversight 
                of the Secretary of the Treasury.
                    (B) Autonomy of monetary authority.--The Secretary 
                of the Treasury may not intervene in any matter or 
                proceeding before the Monetary Authority, unless 
                otherwise specifically provided by law.
                    (C) Independence of monetary authority.--The 
                Secretary of the Treasury may not delay, prevent, or 
                intervene in the issuance of any regulation or other 
                determination of the Monetary Authority, including the 
                determination of the amounts of money to be originated 
                and most efficient method of disbursement consistent 
                with the appropriations of Congress and the statutory 
                objectives of monetary policy as specified in this Act.
            (2) Membership.--
                    (A) In general.--The Monetary Authority shall 
                consist of 9 public members appointed by the president, 
                by and with the advice and consent of the Senate.
                    (B) Terms.--
                            (i) In general.--Except as provided in 
                        subparagraph (E), each member of the Monetary 
                        Authority shall be appointed to a term of 6 
                        years.
                            (ii) Continuation of service.--Each member 
                        of the Monetary Authority may continue to serve 
                        after the expiration of the term of office to 
                        which such member was appointed until a 
                        successor has been appointed and qualified.
                    (C) Political affiliation.--Not more than 4 of the 
                members of the Monetary Authority may be members of the 
                same political party.
                    (D) Vacancy.--
                            (i) In general.--Any vacancy on the 
                        Monetary Authority shall be filled in the 
                        manner in which the original appointment was 
                        made.
                            (ii) Interim appointments.--Any member 
                        appointed to fill a vacancy occurring before 
                        the expiration of the term for which such 
                        member's predecessor was appointed shall be 
                        appointed only for the remainder of such term.
                    (E) Staggered terms.--Of the members first 
                appointed to the Monetary Authority after the enactment 
                of this Act--
                            (i) 1 shall be appointed for a term of 2 
                        years;
                            (ii) 2 shall be appointed for a term of 3 
                        years;
                            (iii) 2 shall be appointed for a term of 4 
                        years;
                            (iv) 2 shall be appointed for a term of 5 
                        years; and
                            (v) 2 shall be appointed for the full term 
                        of 6 years.
            (3) Chairperson.--One of the members of the Monetary 
        Authority shall be designated by the President as the 
        Chairperson of the Monetary Authority.
            (4) Duties.--The Monetary Authority shall--
                    (A) establish monetary supply policy and monitor 
                the Nation's monetary status; and
                    (B) carry out such other responsibilities as the 
                President may delegate to the Monetary Authority or 
                that may be provided by an Act of Congress.
            (5) Governing principle of monetary policy.--The Monetary 
        Authority shall pursue a monetary policy based on the governing 
        principle that the supply of money in circulation should not 
        become inflationary nor deflationary in and of itself, but will 
        be sufficient to allow goods and services to move freely in 
        trade in a balanced manner. The Monetary Authority shall 
        maintain long run growth of the monetary and credit aggregates 
        commensurate with the economy's long run potential to increase 
        production, so as to promote effectively the goals of maximum 
        employment, stable prices, and moderate long-term interest 
        rates.
            (6) Meetings.--The Monetary Authority shall meet on a 
        regular basis subject to the call of the Chairperson, the 
        Secretary, or a majority of the members.
            (7) Pay.--The members of the Monetary Authority shall 
        receive a salary at annual rates equal to the annual rate 
        determined under section 5 of title 28, United States Code, for 
        an associate justice.
            (8) Staff.--The Monetary Authority may appoint and 
        establish the pay of such employees as the Monetary Authority 
        determines is appropriate to assist the Monetary Authority to 
        carry out the duties imposed under this section.
    (b) Responsibility of Secretary.--The Secretary shall regulate the 
monetary supply in reasonable accordance with targets established by 
the Monetary Authority.
    (c) Reports on Discrepancies.--The Secretary shall report to the 
Congress any discrepancy between any monetary target and the monetary 
supply in excess of 0.5 percent at the end of each quarter.

SEC. 303. ESTABLISHMENT OF THE BUREAU OF THE FEDERAL RESERVE.

    (a) In General.--Subchapter I of chapter 3 of title 31, United 
States Code, is amended by adding at the end the following new section:

``SEC. 314. BUREAU OF THE FEDERAL RESERVE.

    ``(a) Establishment.--There is hereby established the Bureau of the 
Federal Reserve as a bureau within the Department of the Treasury 
(hereafter in this section referred to as the `Bureau').
    ``(b) Management.--
            ``(1) Commissioner.--The management of the Bureau shall be 
        vested in a Commissioner who, with the assistance of the Deputy 
        Commissioner and such staff as the Commissioner may appoint, 
        shall carry out the duties vested in the Bureau and the 
        Commissioner.
            ``(2) Deputy commissioner.--There is hereby established 
        within the Bureau the position of Deputy Commissioner.
            ``(3) Appointment.--The Commissioner and the Deputy 
        Commissioner shall be appointed by the president, by and with 
        the advice and consent of the Senate.
            ``(4) Terms.--
                    ``(A) In general.--The Commissioner and the Deputy 
                Commissioner shall each be appointed to a term of 7 
                years.
                    ``(B) Staggered terms.--Notwithstanding 
                subparagraph (A), the person first appointed Deputy 
                Commissioner shall be appointed to a term of 4 years.
            ``(5) Vacancy.--
                    ``(A) In general.--Any vacancy on the Bureau shall 
                be filled in the manner in which the original 
                appointment was made.
                    ``(B) Interim appointments.--Any member appointed 
                to fill a vacancy occurring before the expiration of 
                the term for which such member's predecessor was 
                appointed shall be appointed only for the remainder of 
                such term.
    ``(c) Duties.--
            ``(1) Monetary policy.--The Bureau shall--
                    ``(A) administer, under the direction of the 
                Secretary, the origination and entry into circulation 
                of United States Money, subject to the limitations 
                established by the Monetary Authority; and
                    ``(B) administer lending of United States Money to 
                authorized depository institutions, as described in 
                section 403 (`Revolving Fund') to ensure that--
                            ``(i) money creation is solely a function 
                        of the United States Government; and
                            ``(ii) fractional reserve lending is ended.
            ``(2) Transferred functions.--After the effective date, the 
        Bureau shall exercise all functions consistent with this Act 
        which, before such date, were carried out under the direction 
        of the Board of Governors of the Federal Reserve System.
            ``(3) Itemization by secretary.--Not less than 90 days 
        before the effective date, the Secretary and the Monetary 
        Authority shall itemize--
                    ``(A) the functions of the Board of Governors of 
                the Federal Reserve System that are transferred to the 
                Bureau pursuant to paragraph (2); and
                    ``(B) the provisions of the Federal Reserve Act and 
                other provisions of Federal law, relating to the 
                functions so transferred, in the application of which 
                the term `Bureau' (as established under this section) 
                shall be substituted for the term `Board of Governors 
                of the Federal Reserve System' or `Board', as the case 
                may be.''.
    (b) Clerical Amendment.--The table of sections for subchapter I of 
chapter 3 of title 31, United States Code, is amended by adding at the 
end the following new item:

``314. Bureau of the Federal Reserve.''.
    (c) Role of Board After Enactment.--With effect on the effective 
date, the Board of Governors of the Federal Reserve System shall be 
dissolved.

SEC. 304. FORECASTING OF DISBURSEMENT REQUIREMENTS.

    The Secretary shall--
            (1) forecast disbursement requirements on a daily, monthly, 
        and annual basis;
            (2) provide such forecasts to the Congress and the public;
            (3) integrate forecasts with the Federal budget process;
            (4) maintain a sufficient research capability to 
        continuously and effectively assess the impact of disbursement 
        of United States Money on all aspects of the domestic and 
        international economies; and
            (5) report to the Congress and the public regularly on the 
        economic impact of disbursements of United States Money and the 
        status of the monetary supply.

SEC. 305. LENDER OF LAST RESORT; EMERGENCY PROCEDURES.

    (a) Recommendation of the President Upon Recommendation of 
Emergency Board.--The Monetary Authority may not exercise any authority 
under the 3rd undesignated paragraph of section 13 of the Federal 
Reserve Act unless--
            (1) the Emergency Board established under subsection (b) 
        recommends, upon a vote of 2/3 of the members, to the House of 
        Representatives and the Senate, that the House of 
        Representatives and the Senate adopt a concurrent resolution 
        calling on the President to certify that a national emergency 
        exists which requires the exercise of such authority;
            (2) the House of Representatives and the Senate each adopt, 
        by a vote of 2/3 of the members present, a concurrent 
        resolution calling on the President to certify that a national 
        emergency exists which requires the exercise of such authority; 
        and
            (3) the President issues a certification that a national 
        emergency exists which requires the exercise of such authority 
        by the Monetary Authority.
    (b) Emergency Board.--There is established for purposes of this 
section the Emergency Board which shall consist of the following 
members:
            (1) The President.
            (2) The Secretary of Commerce.
            (3) The Secretary of Energy.
            (4) The Secretary of Labor.
            (5) The Secretary of the Treasury.
            (6) The Speaker of the House of Representatives.
            (7) The minority leader of the House of Representatives.
            (8) The majority leader of the Senate.
            (9) The minority leader of the Senate.
            (10) The chairpersons and ranking members of the Committee 
        on Financial Services and the Committee on Oversight and 
        Government Reform of the House of Representatives.
            (11) The chairpersons and ranking members of the Committee 
        on Banking, Housing, and Urban Affairs and the Committee on 
        Homeland Security and Governmental Affairs of the Senate.
    (c) Rule of Construction.--Except as provided in subsection (a), no 
provision of this Act shall be construed as affecting the authority of 
the Monetary Authority under the 3rd undesignated paragraph of section 
13 of the Federal Reserve Act.

SEC. 306. SAVINGS PROVISIONS AND TRANSFER PROVISIONS.

    (a) Savings Provisions.--
            (1) Existing rights, duties, and obligations not 
        affected.--The establishment of the Bureau of the Federal 
        Reserve shall not affect the validity of any right, duty, or 
        obligation of the United States, the Bureau (as the successor 
        to the Board of Governors of the Federal Reserve System or any 
        Federal reserve bank), or any other person that--
                    (A) arises under any provision of law relating to 
                any function of the Board of Governors of the Federal 
                Reserve System transferred to the Bureau by this title 
                and amendments made by this title; and
                    (B) existed on the day before the effective date.
            (2) Continuation of suits.--This Act shall not abate any 
        proceeding commenced by or against the Board of Governors (or 
        any Federal reserve bank) before the effective date with 
        respect to any function of the Board of Governors (or any 
        Federal reserve bank) transferred to the Bureau by this title, 
        except that the Bureau shall be substituted for the Board of 
        Governors (or Federal reserve bank) as a party to any such 
        proceeding as of the effective date.
    (b) Transfer of Certain Personnel.--
            (1) Identifying employees for transfer.--The Secretary and 
        the Chairman of the Board of Governors of the Federal Reserve 
        System shall--
                    (A) jointly determine the number of employees of 
                the Board necessary to perform or support the functions 
                of the Board of Governors that are transferred to the 
                Monetary Authority (if any) and the Bureau of the 
                Federal Reserve pursuant to a provision of or amendment 
                made by this title; and
                    (B) consistent with the number determined under 
                subparagraph (A), jointly identify employees of the 
                Board of Governors for transfer in a manner that the 
                Secretary and the Board of Governors of the Federal 
                Reserve System, in their sole discretion, determine to 
                be equitable.
            (2) Identified employees transferred.--All employees of the 
        Board of Governors of the Federal Reserve System identified 
        under paragraph (1)(B) shall be transferred to the Monetary 
        Authority or the Bureau of the Federal Reserve, as the case may 
        be, for employment.
            (3) Federal reserve bank employees.--Employees of any 
        Federal reserve bank, as of the day before the transfer date 
        for any employees of the Board of Governors of the Federal 
        Reserve System, shall be treated as employees of the Board of 
        Governors for purposes of paragraph (1) and (2).

                  TITLE IV--TRANSITIONAL ARRANGEMENTS

SEC. 401. CONVERSION OF FEDERAL RESERVE NOTES.

    (a) In General.--Before the end of the 120-day period beginning on 
the date of the enactment of this Act, the Secretary shall establish 
the rules and procedures for converting outstanding Federal reserve 
notes to United States Money of equal face value.
    (b) Provision of Supply Sufficient for Conversion and Issuance.--
Before the end of the 150-day period beginning on the date of the 
enactment of this Act and as Federal reserve notes are converted to 
United States Money, the Secretary shall begin providing a sufficient 
quantity of United States Money to the domestic banking system to allow 
for conversion of all outstanding Federal reserve notes and the 
issuance of additional currency as required.
    (c) Disbursal of Funds.--After the end of the 180-day period 
beginning on the date of the enactment of this Act, all financial 
institutions within the United States shall only disburse funds in 
United States Money, whether as currency, an addition to an available 
account balance, or other instrument.
    (d) Disposal of Obsolete Currency.--The Secretary shall promptly 
dispose of (in the manner provided under section 5120(b) of title 31, 
United States Code, for the disposal of obsolete United States 
currency) all Federal reserve notes as they are returned in exchange 
for United States Money.
    (e) Technical and Conforming Amendment.--Effective at the end of 
the 150-day period beginning on the date of the enactment of this Act, 
section 16 of the Federal Reserve Act is amended by striking the 8th, 
9th, 10th, 11th, and 12th undesignated paragraphs (12 U.S.C. 418, 419, 
420, 421, and omitted, respectively).

SEC. 402. REPLACING FRACTIONAL RESERVE BANKING WITH THE LENDING OF 
              UNITED STATES MONEY.

    (a) Conversion Process.--
            (1) Deposits.--
                    (A) In general.--All deposits at any depository 
                institution shall be designated as and treated as 
                United States Money (either cash or an electronic 
                equivalent) and as transaction accounts.
                    (B) Prohibitions.--In addition to subsection (d), 
                the following provisions shall apply with respect to 
                United States Money on deposit in a transaction account 
                at any depository institution:
                            (i) Interest.--No interest may be paid or 
                        may accrue on any United States Money on 
                        deposit in a transaction account at any 
                        depository institution.
                            (ii) Deposits as bailment.--Any United 
                        States Money on deposit in a transaction 
                        account at any depository institution shall--
                                    (I) be treated as a bailment for 
                                the mutual benefit of the parties and 
                                terminable at will; and
                                    (II) as property held in trust as 
                                bailed property, not be treated as an 
                                asset of the depository institution or 
                                as a source of credit.
                    (C) Exception for long-term savings not subject to 
                deposit insurance.--
                            (i) In general.--Subparagraph (B) shall not 
                        apply to any liability of depository 
                        institution to a customer for any amount in an 
                        account at the depository institution pursuant 
                        to a contract that restricts the availability 
                        of any such amount for a fixed term and does 
                        not permit amounts to be transferred in any 
                        manner for the benefit of a third party.
                            (ii) Fixed-term savings not insured.--Any 
                        account described in clause (i) may not be 
                        treated as a deposit, for purposes of the 
                        Federal Deposit Insurance Act, or as a share 
                        draft account, for purposes of the Federal 
                        Credit Union Act.
            (2) Outstanding credit.--Any asset of a depository 
        institution that results from credit extended against, is 
        attributable to, or has been accounted for with respect to, 
        amounts described in paragraph (1)(A) shall, as of the 
        effective date--
                    (A) be a liability of the depository institution to 
                the Federal Government; and
                    (B) as the outstanding balance is repaid pursuant 
                to its terms, shall be paid over to the Federal 
                Government.
            (3) Deposit in revolving fund.--The monies paid to the 
        Federal Government shall be deposited into the Revolving 
        Account established in section 403.
            (4) In general.--Before the effective date and subject to 
        the requirements of this section, the Monetary Authority shall 
        establish and publish the accounting rules, pricing, and 
        processes which will convert all bank credit in circulation as 
        of the date of such conversion, into United States legal tender 
        money.
            (5) Retention of interest payments.--A depository 
        institution may keep as income, any interest payment made by a 
        customer to a depository institution on an outstanding loan for 
        which the depository institution became indebted to the Federal 
        Government under paragraph (2).
    (b) Treatment of Amounts on Reserve at a Federal Reserve Bank.--The 
Monetary Authority shall determine, by the effective date, how the 
reserves of a depository institution at a Federal reserve bank pursuant 
to section 19 of the Federal Reserve Act shall be treated, so as to 
promote a seamless transition to the new system.
    (c) Accounts in General.--Before the effective date, the Monetary 
Authority shall prescribe new lending and accounting regulations for 
various types of accounts including transaction accounts and time 
deposit accounts described in subsections (d) and (e).
    (d) Transaction Accounts.--
            (1) Fractional reserve banking ended.--The regulations 
        prescribed under subsection (c) shall provide that--
                    (A) any depository institution shall have a 
                fiduciary responsibility for the money of any depositor 
                on deposit in a transaction account which--
                            (i) shall be held for the exclusive use of 
                        the account holder; and
                            (ii) may not be used by a depository 
                        institution to fund loans or investments;
                    (B) a dollar of United States Money shall be on 
                hand or in a Federal Government account for each dollar 
                in a transaction account; and
                    (C) a depository institution may charge a 
                reasonable fee for providing transaction account 
                services.
            (2) Transaction account defined.--For purposes of this 
        section, the term, ``transaction account''--
                    (A) means a deposit or account on which the 
                depositor or account holder is permitted to make 
                withdrawals by negotiable or transferable instrument, 
                payment orders of withdrawal, telephone transfers, or 
                other similar items for the purpose of making payments 
                or transfers to third persons or others; and
                    (B) includes demand deposits, negotiable order of 
                withdrawal accounts, savings deposits subject to 
                automatic transfers, and share draft accounts.
    (e) United States Money as Source of Loans.--After the effective 
date, all lending by depository institutions may be accomplished only 
by the lending of actual United States Money that is--
            (1) owned by the depository institution from earnings and 
        or capital contributions by investors;
            (2) borrowed at interest from the Federal Government; or
            (3) borrowed at interest through the issuance of bonds or 
        other interest-bearing securities by the lending bank, to the 
        extent that such bonds or securities are structured in a manner 
        consistent with the purposes of this Act.
    (f) Encouragement of Private, Profit-Making Money Lending 
Activity.--The regulations prescribed and actions taken under this 
section shall be established and taken in a manner that--
            (1) encourages private, profit-making money lending 
        activity by banking institutions; and
            (2) prohibits the creation of private money through the 
        establishment of lending credit against depository receipts, 
        sometimes referred to as ``fractional reserve banking''.

SEC. 403. ESTABLISHMENT OF FEDERAL REVOLVING FUND.

    (a) Revolving Loan Fund.--Subject to provision in advance in an 
appropriation Act, there is hereby established a revolving loan fund in 
the Treasury of the United States where amounts received from 
depository institutions under terms specified in section 402 of this 
Act shall be deposited and made available for relending to banking 
institutions and for other purposes.
    (b) Administration.--The Revolving Fund shall be administered by 
the Bureau under such terms and conditions as the Secretary shall 
prescribe consistent with the purposes of this Act.
    (c) National Emergency.--In the event of a finding by the President 
that a National Emergency exists, and with the concurrence of the 
Congress in accordance with the emergency procedures specified under 
section 305, the Secretary, on the advice of the Monetary Authority, 
may draw upon up to 80 percent of the funds on deposit in the Revolving 
Fund. Such funds shall be returned to the Revolving Fund within 3 years 
of the date of initial disbursement, either through repayment of loans 
or through an Appropriation Act, unless the Secretary receives from the 
Congress specific authorization to extend the term of the loans. The 
authorization of Congress shall be given by joint resolution.

                     TITLE V--ADDITIONAL PROVISIONS

SEC. 501. DIRECT FUNDING OF INFRASTRUCTURE IMPROVEMENTS.

    (a) Report Required on Opportunities for Direct Funding.--Before 
the effective date, the Secretary, after consultation with the heads of 
Executive branch departments, agencies and independent establishments, 
shall report to the Congress on opportunities to utilize direct funding 
by the United States Government to modernize, improve, and upgrade the 
physical economy of the United States in such areas as transportation, 
agriculture, water usage and availability, sewage systems, medical 
care, education, and other infrastructure systems, to promote the 
general welfare, and to stabilize the Social Security retirement 
system.
    (b) Broad Equitable Dispersion of Funding.--Generally, any program 
recommended for direct funding shall be undertaken throughout the 
Nation based on per capita amounts and other criteria to assure equity 
as determined by the Monetary Authority.

SEC. 502. INTEREST RATE CEILINGS.

    (a) Limit on Amount of Financing Fees.--The total amount of 
interest charged by a financial institution on any extension of loans 
(other than a mortgage) to any individual borrower through 
amortization, including all fees and service charges, shall not exceed 
the total amount of the loan extended.
    (b) Limit on Rate.--The annual percentage rate applicable to any 
loan of money may not exceed 8 percent on unpaid balances, inclusive of 
all charges.

SEC. 503. AUTHORITY OF FDIC.

    Except as provided in section 402 and the amendment made by section 
3(b), no provision of this Act shall be construed as altering or 
affecting any authority or function of the Federal Deposit Insurance 
Corporation. No later than 12 months after the date of the enactment of 
this Act, the Chairperson of the Board of Directors of the Federal 
Deposit Insurance Corporation shall study and make recommendations to 
the Congress regarding any changes in authorities, including expanded 
supervision and monitoring, required to enhance the oversight and 
regulatory roles of the Federal Deposit Insurance Corporation under 
this Act.

SEC. 504. MONETARY GRANTS TO STATES.

    (a) In General.--Each year, the Monetary Authority shall instruct 
the Secretary to disperse grants over a 12-month period to the States 
equal to 25 percent of the money created under this title in the prior 
year. In the first year the amount of such grants shall be 25 percent 
of the anticipated money creation in that first year.
    (b) Use of Grants for Broad-Based Purposes.--The States may use 
such funds in broadly designated areas of public infrastructure, 
education, health care and rehabilitation, pensions, and paying for 
unfunded Federal mandates.

SEC. 505. EDUCATION FUNDING PROGRAM.

    Before the end of the 120-day period beginning on the date of the 
enactment of this Act, the Secretary, in cooperation with the Secretary 
of Education, shall provide recommendations to the Congress for a 
program to help fund our educational system that will put the United 
States on par with other highly developed nations, and to sufficiently 
provide for universal pre-kindergarten, fully funded State programs for 
elementary and secondary education and universal college at every 2- 
and 4-year public institution of higher learning and create a learning 
environment so that every child has an opportunity to reach their full 
educational potential.

SEC. 506. SOCIAL SECURITY TRUST FUNDS.

    The Secretary in consultation with the Board of Trustees of the 
Federal Old-Age and Survivors Insurance and Federal Disability 
Insurance Trust Funds shall submit to the Monetary Authority any 
requests to cover impending deficits in Social Security Trust Fund 
accounts.

SEC. 507. INITIAL MONETARY DIVIDEND TO CITIZENS.

    (a) In General.--Before the effective date, the Secretary, in 
cooperation with the Monetary Authority, shall make recommendations to 
the Congress for payment of a Citizens Dividend as a tax-free grant to 
all United States citizens residing in the United States in order to 
provide liquidity to the banking system at the commencement of this 
Act, before governmental infrastructure expenditures have had a chance 
to work into circulation.
    (b) Study of Effects of Citizens Dividend.--The Secretary shall 
maintain a thorough study of the effects of the Citizens Dividend 
observing its effects on production and consumption, prices, morale, 
and other economic and fiscal factors.

SEC. 508. UNIVERSAL HEALTH CARE FUNDING.

    The Congress shall be aware that funding through this Act is 
available for a universal health care plan as may be enacted by 
Congress.

SEC. 509. RESOLVING THE MORTGAGE CRISIS.

    The Congress shall be aware that funding through this Act is 
available for Congressional enactments for resolving aspects of the 
mortgage crisis.

SEC. 510. INTEREST FREE LENDING TO LOCAL GOVERNMENTAL BODIES.

    Before the end of the 180-day period beginning on the date of the 
enactment of this Act, the Secretary shall provide recommendations to 
the Congress for a program of interest-free lending of United States 
Money to State and local governmental entities, including school boards 
and emergency fire services for infrastructure improvements under their 
control and within their jurisdictions, based on per capita amounts and 
other criteria to assure equity as determined by the Monetary 
Authority.
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