(2) IDENTIFIED EMPLOYEES TRANSFERRED.— 
All employees of the Board of Governors of the Fed-
eral Reserve System identified under paragraph 
(1)(B) shall be transferred to the Monetary Author-
ity 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 Sys-
tem, 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 pe-
riod 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 CON-
VERSION 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 suffi-
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cient 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 cur-
rency 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 Sec-
retary 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 Fed-
eral 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). 
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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 de-
pository institution shall be designated as and 
treated as United States Money (either cash or 
an electronic equivalent) and as transaction ac-
counts. 
(B) PROHIBITIONS.—In addition to sub-
section (d), the following provisions shall apply 
with respect to United States Money on deposit 
in a transaction account at any depository insti-
tution: 
(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 trans-
action account at any depository institu-
tion shall— 
(I) be treated as a bailment for 
the mutual benefit of the parties and 
terminable at will; and 
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(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 deposi-
tory institution to a customer for any 
amount in an account at the depository in-
stitution pursuant to a contract that re-
stricts 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
IN-
SURED.—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 pur-
poses of the Federal Credit Union Act. 
(2) OUTSTANDING CREDIT.—Any asset of a de-
pository institution that results from credit extended 
against, is attributable to, or has been accounted for 
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with respect to, amounts described in paragraph 
(1)(A) shall, as of the effective date— 
(A) be a liability of the depository institu-
tion 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 mon-
ies paid to the Federal Government shall be depos-
ited into the Revolving Account established in sec-
tion 403. 
(4) IN GENERAL.—Before the effective date and 
subject to the requirements of this section, the Mon-
etary Authority shall establish and publish the ac-
counting rules, pricing, and processes which will con-
vert 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 in-
terest payment made by a customer to a depository 
institution on an outstanding loan for which the de-
pository institution became indebted to the Federal 
Government under paragraph (2). 
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(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 pursu-
ant to section 19 of the Federal Reserve Act shall be treat-
ed, so as to promote a seamless transition to the new sys-
tem. 
(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 de-
positor 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; 
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(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 ac-
count’’— 
(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, tele-
phone 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— 
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(1) owned by the depository institution from 
earnings and or capital contributions by investors; 
(2) borrowed at interest from the Federal Gov-
ernment; 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 secu-
rities 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 ‘‘frac-
tional 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 estab-
lished a revolving loan fund in the Treasury of the United 
States where amounts received from depository institu-
tions under terms specified in section 402 of this Act shall 
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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 condi-
tions as the Secretary shall prescribe consistent with the 
purposes of this Act. 
(c) NATIONAL EMERGENCY.—In the event of a find-
ing 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 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 repay-
ment of loans or through an Appropriation Act, unless the 
Secretary receives from the Congress specific authoriza-
tion 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 IM-
PROVEMENTS. 
(a) REPORT REQUIRED ON OPPORTUNITIES FOR DI-
RECT FUNDING.—Before the effective date, the Secretary, 
after consultation with the heads of Executive branch de-
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partments, 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, edu-
cation, and other infrastructure systems, to promote the 
general welfare, and to stabilize the Social Security retire-
ment system. 
(b) BROAD EQUITABLE DISPERSION OF FUNDING.— 
Generally, any program recommended for direct funding 
shall be undertaken throughout the Nation. 
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 amend-
ment made by section 3(b), no provision of this Act shall 
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be construed as altering or affecting any authority or func-
tion 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 regu-
latory roles of the Federal Deposit Insurance Corporation 
under this Act. 
SEC. 504. MONETARY GRANTS TO STATES. 
(a) IN GENERAL.—Each year, the Monetary Author-
ity 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
PUR-
POSES.—The States may use such funds in broadly des-
ignated 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 
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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 edu-
cation and universal college at every 2- and 4-year public 
institution of higher learning and create a learning envi-
ronment 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 sub-
mit to the Monetary Authority any requests to cover im-
pending deficits in Social Security Trust Fund accounts. 
SEC. 507. INITIAL MONETARY DIVIDEND TO CITIZENS. 
(a) IN GENERAL.—Before the effective date, the Sec-
retary, 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 commence-
ment of this Act, before governmental infrastructure ex-
penditures have had a chance to work into circulation. 
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(b) STUDY OF EFFECTS OF CITIZENS DIVIDEND.— 
The Secretary shall maintain a thorough study of the ef-
fects of the Citizens Dividend observing its effects on pro-
duction and consumption, prices, morale, and other eco-
nomic 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 re-
solving aspects of the mortgage crisis. 
SEC. 510. INTEREST FREE LENDING TO LOCAL GOVERN-
MENTAL 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 improve-
ments under their control and within their jurisdictions, 
based on per capita amounts and other criteria to assure 
equity as determined by the Monetary Authority. 
Æ 
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