A bill to amend the Federal Reserve Act to authorize Federal reserve banks to lend certain obligations to the Secretary of the Treasury to meet the short-term cash requirements of the Treasury, and for other purposes.
PL 96-18 (H.R.3404), enacted 06/08/1979

PUBLIC LAW 96-18—JUNE 8, 1979 
93 STAT. 35 
Public Law 96-18 
96th Congress 
An Act 
To amend the Federal Reserve Act to authorize Federal Reserve banks to 
lend certain obligations to the Secretary of the Treasury to meet the 
short-term cash requirements of the Treasury, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That (a) section 
14(b)(1) of the Federal Reserve Act (12 U.S.C. 355(1)) is amended by 
striking out ": Provided, That," and all that follows through the end 
thereof and inserting in lieu thereof a period. 
(b) Section 14(b)(2) of the Federal Reserve Act (12 U.S.C. 355(2)) is 
amended by striking out "any agency of the United States" and 
inserting in lieu thereof the follov^^ing: "the United States or any 
agency of the United States, and to lend, under the direction and 
regulations of the Federal Open Market Committee, any such obliga-
tion to the Secretary of the Treasury". 
(c) Section 14(b) of the Federal Reserve Act (12 U.S.C. 355) is 
amended by adding at the end thereof the follov^ing new paragraphs: 
"(3) In unusual and exigent circumstances and when authorized, 
for renewable periods not to exceed thirty days, by the Board of 
Governors of the Federal Reserve System pursuant to an affirmative 
vote of not less than five members, to buy and sell, without regard to 
maturities, directly from or to the United States any bonds, notes, or 
other obligations which are direct obligations of the United States or 
which are fully guaranteed by the United States as to principal and 
interest. Such purchases and sales shall be made in accordance with 
the provisions of section 12A of this Act. The Board of Governors of 
the Federal Reserve System shall include in their annual report to 
Congress detailed information with respect to direct purchases and 
sales from or to the United States under the provisions of this 
paragraph. 
"(4) The aggregate amount of obligations acquired directly from the 
United States or loaned directly to the United States under the 
authority of this section which is held or loaned at any one time by 
the twelve Federal Reserve banks shall not exceed $5,000,000,000.". 
SEC. 2. Section 14 of the Federal Reserve Act (12 U.S.C. 353 et seq.) 
is amended by adding at the end thereof the following new 
subsection: 
"(h) The Secretary of the Treasury shall have the authority to 
borrow, subject to the approval and rules and regulations of the 
Federal Open Market Committee, any obligation referred to in 
subsections (b)(2) and (b)(3) from any Federal Reserve bank and to sell 
any such obligation in the open market for the purpose of meeting the 
short-term cash needs of the Treasury. Not later than six months 
after the date of sale of such an obligation, the Secretary of the 
Treasury shall repurchase such obligation and return such obligation 
to the Federal Reserve bank from which such obligation was bor-
rowed. The aggregate of the face amount of obligations borrowed 
under the authority of this section shall be included, during the 
period of such borrowing, as part of the public debt subject to the 
June 8, 1979 
[H.R. 3404] 
Treasury draw 
policy, 
amendment. 
Federal Reserve 
banks, open 
market 
purchases and 
sales. 
Purchases and 
sales from or to 
United States. 
12 u s e 263. 
Inclusion in 
report to 
Congress. 
Obligations 
acquired or 
loaned to the 
United States, 
limitation. 
Treasury, 
authority to 
borrow and sell 
in open market. 
12 u s e 359a. 
Repurchase and 
return to 
Federal Reserve 
banks. 
93 STAT. 36 
Effective date; 
expiration. 
12 u s e 355 note. 
Ante, p. 35. 
PUBLIC LAW 96-18—JUNE 8, 1979 
limitation imposed by section 21 of the Second Liberty Bond Act (31 
U.S.C.757b).". 
SEC. 3. (a) Except for the amendments made by subsection (a) of the 
first section of this Act, and except for the amendment made by 
subsection (b) of this section, the amendments made by this Act shall 
be effective only during the two-year period which begins on the date 
of enactment of this Act. Upon the expiration of such period, each 
provision of law amended by this Act, except section 14(b)(1) of the 
Federal Reserve Act, is amended to read as it did immediately prior 
to the enactment of 
this Act. 
(b) Upon the expiration of the two-year period which begins on the 
date of enactment of this Act, section 14(b)(1) of the Federal Reserve 
Act (12 U.S.C. 355(1)) is further amended by adding at the end thereof 
the following new sentence: "Notwithstanding any other provision of 
this Act, any bonds, notes, or other obligations which are direct 
obligations of the United States or which are fully guaranteed by the 
United States as to principal and interest may be bought and sold 
without regard to maturities but only in the open market." 
Approved June 8, 1979. 
, 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 96-111 (Comm. on Banking, Finance and Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 125 (1979): 
May 23, considered and passed House. 
May 24, considered and passed Senate.