An Act to extend the authority for the flexible regulation of interest rates on deposits and accounts in depository institutions, to promote the accountability of the Federal Reserve System, and for other purposes.
PL 95-188 (H.R.9710), enacted 11/16/1977

PUBLIC LAW 95-188—NOV. 16, 1977 
91 STAT. 1387 
Public Law 95-188 
95th Congress 
An Act 
To extend the authority for the flexible regulation of interest rates on deposits 
and accounts in depository institutions, to promote the accountability of the 
Federal Reserve System, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ 
T I T L E I — R E G U L A T I O N O F I N T E R E S T R A T E S 
SEC. 101. Section 7 of the Act of September 21, 1966 (Public Law 
89-597), is amended by striking out "December 15,1977" and inserting 
in lieu thereof "December 15,1978". 
T I T L E I I — A M E N D M E N T S TO T H E 
F E D E R A L 
R E S E R V E ACT 
SEC. 201. This title may be cited as the "Federal Reserve Reform 
Act of 1977". 
Nov. 16, 1977 
[H.R. 9710] 
Depository 
institutions. 
Interest rate 
controls, 
extension. 
12 use 461 note. 
Federal Reserve 
Reform Act of 
1977. 
12 use 226 
note. 
CONGRESSIONAL-FEDERAL RESERVE DIALOG OX MONETARY POLICY 
SEC. 202. Insert a new section 2A immediately after section 2 of the 
Federal Reserve Act to read as follows: 
u 
GENERAL POLICY: CONGRESSIONAL REVIEW 
"SEC. 2 A . The Board of Governors of the Federal Reserve System 
and the Federal Open Market Committee 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 pro-
mote effectively the goals of maximum employment, stable prices, and 
moderate long-term interest rates. The Board of Governors shall con-
sult with Congress at semiannual hearings before the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Com-
mittee on Banking, Finance and Urban Affairs of the House of Rep-
resentatives about the Board of Governors' and the Federal Open 
Market Committee's objectives and plans with respect to the ranges 
of growth or diminution of monetary and credit aggregates for the 
upcoming twelve months, taking account of past and prospective devel-
opments in production, employment, and prices. Nothing in this Act 
shall be interpreted to require that such ranges of growth or diminu-
tion be achieved if the Board of Governors and the Federal Open 
Market Committee determine that they cannot or should not be 
achieved because of changing conditions.". 
BOARD OF DIRECTORS OF FEDERAL RESERVE BANKS 
SEC. 202. The following paragraphs of section 4 of the Federal 
Reserve Act are amended: 
(a) the tenth paragraph by inserting after the comma the fol-
lowing : "without discrimination on the basis of race, creed, color, 
sex, or national origin,". 
12 use 225a. 
Semiannual 
hearings before 
congressional 
committees. 
12 use 301 
and note. 
12 use 302. 
91 STAT. 1388 
PUBLIC LAW 95-188—NOV. 16, 1977 
12 use 302. 
12 use 302. 
(b) the eleventh paragraph by striking all after "members," 
and substituting "who shall represent the public and shall be 
elected without discrimination on the basis of race, creed, color, 
sex, or national origin, and with due but not exclusive considera-
tion to the interests of agriculture, commerce, industry, services, 
labor, and consumers.". 
(c) the twelfth paragraph by inserting immediately after the 
first sentence thereof the following sentence: "They shall be 
elected to represent the public, without discrimination on the 
basis of race, creed, color, sex, or national origin, and with due 
but not exclusive consideration to the interests of agriculture, 
commerce, industry, services, labor, and consumers.". 
Effective date. 
12 u s e 242 note. 
SENATE CONFIRMATION OF CHAIRMAN AND VICE CHAIRMAN OF BOARD OF 
GOVERNORS 
SEC. 204. (a) The third sentence of the second paragraph of section 
10 of the Federal Reserve Act (12 U.S.C. 242) is amended to read as 
follows: "Of the persons thus appointed, one shall be designated by 
the President, by and with the advice and consent of the Senate, to 
serve as Chairman of the Board for a tenn of four years, and one shall 
be designated by the President, by and with the consent of the Senate, 
to serve as Vice Chairman of the Board for a term of four years.". 
(b) The amendment made by subsection (a) takes effect on Jan-
uary 1, 1979, and applies to individuals who are designated by the 
President on or after such date to serve as Chairman or Vice Chair-
man of the Board of Governors of the Federal Reserve System. 
CONFLICTS OF INTEREST 
SEC. 205. (a) Subsection 208(a) of title 18, United States Code, 
is amended by adding "a Federal Reserve bank director, officer, or 
employee," immediately before "or of the District of Columbia". 
(b) Subsection 208(b) of title 18, United States Code, is amended 
by adding the following new sentence at the end thereof: "In the case 
of class A and B directors of Federal Reserve banks, the Board of 
Governors of the Federal Reserve System shall be the Government 
official responsible for appointment.". 
REFERENCES TO FEDERAL RESERVE ACT PARAGRAPHS 
SEC. 206. References in this title to paragraphs of the Federal 
12 use 226. 
Reserve Act refer to the paragraphs as designated in the compilation 
of the Federal Reserve Act as amended through 1974, compiled under 
the direction of the Board of Governors of the Federal Reserve System 
in its legal division. 
TITLE III—AMENDMENTS TO THE BANK HOLDING 
COMPANY ACT OF 1956 
Acquired shares, 
disposition, time 
extension. 
SEC. 301. (a) Section 3(a) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1842(a)) is amended by inserting after the second 
sentence the following new sentence: "The Board is authorized upon 
application by a bank to extend, from time to time for not more than 
PUBLIC LAW 95-188—NOV. 16, 1977 
91 STAT. 1389 
one year at a time, the two-year period referred to above for dispos-
ing of any shares acquired by a bank in the regular course of securing 
or collecting a debt previously contracted in good faith, if, in the 
Board's judgment, such an extension would not be detrimental to the 
public interest, but no such extension shall in the aggregate exceed 
three years.". 
(b) Section 2(a) (5) (D) of such Act (12 U.S.C. 1841(a) (5) (D)) 
is amended by adding at the end thereof the following new sentence: 
"The Board is authorized upon application by a company to extend, 
from time to time for not more than one year at a time, the two-year 
period referred to herein for disposing of any shares acquired by a 
company in the regular course of securing or collecting a debt previ-
ously contracted in good faith, if, in the Board's judgment, such an 
extension would not be detrimental to the public interest, but no such 
extension shall in the aggregate exceed three years.". 
(c) Section 4(c)(2) of the Bank Holding Company Act of 1956, 
as amended (12 U.S.C. 1843(c)(2)), is amended by striking out 
"shares acquired by a bank in satisfaction of a debt previously con-
tracted in good faith, but such bank shall dispose of such shares within 
a period of two years" and inserting in lieu thereof the following: 
"'shares acquired by a bank holding company or any of its subsidiaries 
in satisfaction of a debt previously contracted in good faith, but such 
shares shall be disposed of within a period of two years". 
SEC. 302. Section 3(b) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1842) is amended to read as follows: 
"(b) Upon receiving from a company any application for approval 
under this section, the Board shall give notice to the Comptroller of 
the Currency, if the applicant company or any bank the voting shares 
or assets of which are sought to be required is a national banking asso-
ciation or a District bank, or to the appropriate supervisory authority 
of the interested State, if the applicant company or any bank the vot-
ing shares or assets of which are sought to be acquired is a State bank, 
in order to provide for the submission of the views and recommenda-
tions of the Comptroller of the Currency or the State supervisory 
authority, as the case may be. The views and recommendations shall be 
submitted within thirty calendar days of the date on which notice is 
given, or within ten calendar days of such date if the Board advises 
the Comptroller of the Currency or the State supervisory authority 
that an emergency exists requiring expeditious action. If the thirty-
day notice period applies and if the Comptroller of the Currency or 
the State supervisory authority so notified by the Board disapproves 
the application in writing within this period, the Board shall forthwith 
give written notice of that fact to the applicant. Within three days 
after giving such notice to the applicant, the Board shall notify in 
writing the applicant and the disapproving authority of the date for 
commencement of a hearing by it on such application. Any such hear-
ing shall be commenced not less than ten nor more than thirty days 
after the Board has given written notice to the applicant of the action 
of the disapproving authority. The length of any such hearing shall 
be determined by the Board, but it shall afford all interested parties a 
reasonable opportunity to testify at such hearing. At the conclusion 
thereof, the Board shall, by order, grant or deny the application on 
Bank shares or 
assets, 
applications for 
acquisition. 
Notice to 
Comptroller of 
the Currency or 
State supervisory 
authority. 
Views and 
recommenda-
tions. 
Disapproval. 
Hearings. 
91 STAT. 1390 
PUBLIC LAW 95-188—NOV. 16, 1977 
Applications, 
nonaction 
deemed approval. 
Acquisitions, 
-mergers, <ind 
consolidations. 
Notification to 
Attorney 
General. 
12 u s e 1842. 
Antitrust actions. 
Judicial 
standards. 
the basis of the record made at such hearing. In the event of the f aihire 
of the Board to act on any application for approval under this section 
within the ninety-one-day period which begins on the date of submis-
sion to the Board of the complete record on that application, the appli-
cation shall be deemed to have been granted. Notwithstanding any 
other provision of this subsection, if the Board finds that it nmst act 
immediately on any application for approval under this section in 
order to j^revent the probable failure of a bank or bank holding com-
pany involved in a proposed acquisition, merger, or consolidation trans-
action, the Board may dispense with the notice requirements of this 
subsection, and if notice is given, the Board may request that the views 
and recommendations of the Comptroller of the Currency or the State 
supervisory authoj'ity, as the case may be. be submitted immediately 
in any form or by any means acceptable to the Board. If the Board has 
found pui'snant to this subsection either" that an emergency exists 
requiiing expeditious action or that it nmst act immediately to prevent 
probable failni-e. the l^oard may grant or deny any such application 
without a hearing notwithstanding any recommended disapproval by 
the appropriate supervisory authoi'ity.". 
SEC. 303. Section 11 (b) "of the I k n k Holding Company Act of 1966 
(12 U.S.C. 1849) is amended to read as follows: 
"(b) Tlie Board shall immediately notify the Attorney General of 
any approval by it pursuant to section 3 of a proposed acquisition, 
merger, or consolidation transaction. If the Board has found that it 
must act immediately in order to prevent the probable failure of a bank 
or bank holding company involved in any such transaction, the trans-
action may be consummated immediately upon approval by the Board. 
If the Board has advised tlie Comptroller of the (^urrency or the State 
supervisory authority, as the case may be, of the existence of an emer-
gency requiring expeditious action and has required the submission of 
views and recommendations within ten days, the transaction may not 
be consumnuited before the fiftli calendar day after the date of approval 
by the Board. In all other cases, the transaction may not be consum-
mated before the thirtieth calendar day after the date of approval by 
the Board. Any action brought under the antitrust laws arising out of 
an acquisition, merger, or consolidation transaction approved under 
section 3 shall be commenced prior to the earliest time under this 
subsection at which the transaction approval under section 3 might be 
consummated. The commencement of such an action shall stay the 
effectiveness of the Board's approval unless the court shall otherwise 
specifically order. In any such action, the court shall review de novo the 
issues presented. In any judicial proceeding attacking any acquisition, 
merger, or consolidation transaction approved pursuant to section 3 on 
the ground that such transaction alone and of itself constituted a 
violation of any antitrust laws other than section 2 of the Act of eluly 2, 
1890 (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), the stand-
ards applied by the court shall be identical with those that the Board is 
directed to apply under section 3 of this Act. Upon the consummation 
of an acquisition, merger, or consolidation transaction approved under 
section 3 in compliance with this Act and after the termination of any 
antitrust litigation commenced within the period prescribed in this 
section, or upon the termination of such period if no such litigation is 
PUBLIC LAW 95-188—NOV. 16, 1977 
91 STAT. 1391 
commenced therein, the transaction may not thereafter be attacked in 
any judicial proceeding on the ground that it alone and of itself con-
stituted a violation of any antitrust laws other than section 2 of the Act 
of July 2, 1890 (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), 
but nothing in this Act shall exempt any bank holding company 
involved in such a transaction from complying with the antitrust laws 
after the consummation of such transaction,". 
Approved November 16, 1977, 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-774 (Comm. on Banking, Finance and Urban Affairs). 
CONGRESSIONAL RECORD, VoL 123 (1977): 
Oct. 31, considered and passed House. 
Nov. 1, considered and passed Senate, amended. 
Nov. 2, House concurred in Senate amendment. 
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