An Act to prohibit insured banks from issuing negotiable interest-bearing or discounted notes, certificates of deposit, or other evidence of indebtedness
PL 89-597 (H.R.14026), enacted 09/21/1966

80 
STAT.] 
PUBLIC LAW 89-597-SEPT. 21, 1966 
823 
project for the production on newly irrigated lands of any basic agri-
cultural commodity, as defined in the Agricultural Act of 1949, or any 
amendment thereof, if the total supply of such commodity for the mar-
keting year in which the bulk of the crop would normally be marketed 
is in excess of the normal supply as defined in section 301(b) (10) of 
the Agricultural Adjustment Act of 1938, as amended, unless the 
Secretary of Agriculture calls for an increase in production of such 
commodity in the interest of national security. 
SEC. 6. There is hereby authorized to be appropriated for the con-
struction of the Tualatin project the sum of $20,900,000 (January 1965 
prices) plus or minus such amounts, if any, as may be justified by 
reason of ordinary fluctuations in construction costs as indicated by 
engineering cost indexes applicable to the types of construction in-
volved therein, and, in addition thereto, such sums as may be required 
to operate and maintain said project. 
Approved September 20, 1966. 
63 Stat. 1051. 
7 u s e 14'1 
note. 
62 Stat. 1251. 
7 u s e 1301, 
Appropriation. 
Public Law 89-597 
AN ACT 
To provide for the more flexible regulation of maximum rates of interest or 
dividends payable by banks and certain other financial institutions on deposits 
or share accounts, to authorize higher reserve requirements on time deposits 
at member banks, to authorize open market operations in agency issues by 
the Federal Reserve banks, and for other purposes. 
September 2 1, 1966 
[H. R. 14026] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assemibled, 
SECTION 1. The Secretary of the Treasury, the Board of Governors 
of the Federal Reserve System, the Board of Directors of the Federal 
Deposit Insurance Corporation, and the Federal Home Loan Bank 
Board, in implementation of their respective powers under existing 
law and this Act, shall take action to bring about the reduction of 
interest rates to the maximum extent feasible in the light of prevailing 
money market and general economic conditions. 
Banks. 
Interest rates, 
controls. 
RESERVES AND RATE CEILINGS—MEMBER 
BANKS 
SEC. 2. (a) Section 19 of the Federal Reserve Act is amended by 
striking the first six paragraphs (12 U.S.C. 461, 462, and 462b) and 
inserting: 
"(a) The Board is authorized for the purposes of this section to 
define the terms used in this section, to determine what shall be deemed 
a payment of interest, and to prescribe such regulations as it may deem 
necessary to effectuate the purposes of this section and to prevent 
evasions thereof. 
"(b) Every member bank shall maintain reserves against its 
deposits in such ratios as shall be determined by the affirmative vote of 
not less than four members of the Board within the following 
limitations: 
"(1) In the case of any member bank in a reserve city, the 
minimum reserve ratio for any demand deposit shall be not less 
than 10 per centum and not more than 22 per centum, except that 
the Board, either in individual cases or by regulation, on such 
basis as it may deem reasonable and appropriate in view of the 
character of business transacted by such bank, may make appli-
cable the reserve ratios prescribed for banks not in reserve cities. 
"(2) In the case of any member bank not in a reserve city, the 
40 Stat. 239. 
824 
PUBLIC LAW 89.597-SEPT. 21, 1966 
[80 STAT. 
minimum reserve ratio for any demand deposit shall be not less 
than 7 per centum and not more than 14 per centum. 
"(3) In the case of any deposit other than a demand deposit, 
the minimum reserve ratio shall be not less than 3 per centum 
and not more than 10 per centum. 
"(c) Reserves held by any member bank to meet the requirements 
imposed pursuant to subsection (b) of this section shall be in the 
form of— 
" (1) balances maintained for such purpose by such bank in the 
Federal Reserve bank of which it is a member, and 
"(2) the currency and coin held by such bank, or such part 
thereof as the Board may by regulation prescribe." 
(b) The paragraphs which, prior to the amendments made by this 
Act, were the seventh (12 U.S.C. 374a), eighth (12 U.S.C. 374, 463), 
ninth (12 U.S.C. 464), tenth (12 U.S.C. 465), eleventh (12 U.S.C. 
466), twelfth (12 U.S.C. 37la), and thirteenth (12 U.S.C. 371b) para-
graphs of section 19 of the Federal Reserve Act are respectively 
redesignated as subsections (d), (e), (f), (g), (h), (i),and (]) of that 
section. 
(c) Such section is further amended by striking the first sentence 
i2%ic%lh^' 
^^ subsection (j) as redesignated (12 U.S.C. 371) and inserting: "The 
Board may from time to time, after consulting with the Board of 
Directors of the Federal Deposit Insurance Corporation and the 
Federal Home Loan Bank Board, limit by regulation the rates of 
interest which may be paid by member banks on time and savings 
deposits. The Board may prescribe different rate limitations for 
different classes of deposits, for deposits of different amounts or 
with different maturities or subject to different conditions regarding 
withdrawal or repayment, according to the nature or location of mem-
ber banks or their depositors, or according to such other reasonable 
bases as the Board may deem desirable in the public interest." 
fslMt. 715. 
(^) '^^® 1.^* paragraph of such section (12 U.S.C. 462a-l) and 
the proviso in section 8 of the Second Liberty Bond Act (31 U.S.C. 
40 Stat. 504. 
771) are repealed. 
RATE CEILINGS—INSURED NONMEMBER 
BANKS 
64 Stat. 893. 
SEC. 3. The second and third sentences of section 18(g) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1828(g)) are amended to read 
as follows: "The Board of Directors may from time to time, after 
consulting with the Board of Governors of the Federal Reserve Sys-
tem and the Federal Home Loan Bank Board, limit by regulation the 
rates of interest or dividends that may be paid by insured nonmember 
banks (including insured mutual savings banks) on time and savings 
deposits. The Board of Directors may prescribe different rate limita-
tions for different classes of deposits, for deposits of different amounts 
or with different maturities or subject to different conditions regarding 
withdrawal or repayment, according to the nature or location of in-
sured nonmember banks or their depositors, or according to such other 
reasonable bases as the Board of Directors may deem desirable in the 
public interest." 
RATE CEILINGS—SAVINGS AND LOAN ASSOCIATIONS 
SEC. 4. The Federal Home Loan Bank Act is amended by adding 
64 Stat. 257. 
after section 5A thereof (12 U.S.C. 1425a) the following new section: 
"SEC. 5 B . The Board may from time to time, after consulting with 
the Board of Governors of the Federal Reserve System and the Board 
of Directors of the Federal Deposit Insurance Corporation, limit by 
80 STAT. ] 
PUBLIC LAW 89-598-SEPT. 21, 1966 
825 
regulation the rates of interest or dividends on deposits, shares, or 
withdrawable accounts that may be paid by members, other than those 
the deposits of which are insured in accordance with the provisions 
of the Federal Deposit Insurance Act, and by institutions which are 
12 us'c isii 
insured institutions as defined in section 401(a) of the National note. 
Housing Act. 
The Board may prescribe different rate limitations 
^^ stat. 1255. 
for different classes of deposits, shares, or withdrawable accounts, 
for deposits, shares, or withdrawable accounts of different amounts or 
with different maturities or subject to different conditions regarding 
withdrawal or repayment, according to the nature or location of 
such members or institutions or their depositors, shareholders, or 
Avithdrawable accountholders, or according to such other reasonable 
bases as the Board may deem desirable in the public interest." 
OUTSTANDING RATE REGULATIONS 
SEC. 5. Any regulation prescribed by the Board of Governors of 
the Federal Reserve System or the Board of Directors of the Federal 
Deposit Insurance Corporation with respect to the payment of 
deposits and interest thereon by members banks or insured nonmem-
ber banks which is in effect when this Act is enacted shall continue 
in effect unless and until it is modified or rescinded after consultation 
with the Board of Directors or the Board of Governors, as the case 
may be, and the Federal Home Loan Bank Board. 
OPEN MARKET 
OPERATIONS 
SEC. 6. Section 14(b) of the Federal Reserve Act (12 U.S.C. 355) 
38 stat. 265. 
is amended by inserting " (1)" immediately after "(b)" and by adding 
the following new paragraph at the end: 
"(2) To buy and sell in the open market, under the direction and 
regulations of the Federal Open Market Committee, any obligation 
which is a direct obligation of, or fully guaranteed as to principal and 
interest by, any agency of the United States," 
SEC. 7. The provisions of the preceding sections of this Act shall be 
effective only during the one-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 is further amended to read as 
it did immediately prior to the enactment of this Act. 
Approved September 21, 1966. 
Public Law 89-598 
AN 
A P T 
^i> ^ v ^ x 
September 21, 1966 
Relating to the composition of the District of Columbia Court of General 
[S- 2263] 
Sessions. 
Be it enacted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 11-902 
^.c. 
(a) of the District of Columbia Code is amended by striking out 
77 stat 487. 
"fifteen" and inserting in lieu thereof "twenty". 
Approved September 21, 1966.