An act to authorize automatic transfer accounts at commercial banks, remote service units at Federal savings and loan associations, and share draft accounts at Federal credit unions during that period beginning on December 31, 1979, and ending on April 1, 1980.
PL 96-161 (H.R.4998), enacted 12/28/1979

PUBLIC LAW 96-161—DEC. 28, 1979 
93 STAT. 1233 
Public Law 96-161 
96th Congress 
An Act 
To authorize automatic transfer accounts at commercial banks, remote service units at 
Federal savings and loan associations, and share draft accounts at Federal credit 
unions during the period beginning on December 31,1979, and ending on April 1,1980. 
Be it enacted by the Senate and House of Representatives of the 
United States of 
America in Congress assembled, 
TITLE I-CONSUMER SERVICES AND USURY 
SEC. 101. (a) Section 19(1) of the Federal Reserve Act (12 U.S.C. 371a) 
is amended by adding at the end thereof the following: "Notwith-
standing any other provision of this section, a member bank may 
permit withdrawals to be made automatically from a savings deposit 
that consists only of funds in which the entire beneficial interest is 
held by one or more individuals through pa3mient to the bank itself or 
through transfer of credit to a demand deposit or other account 
pursuant to written authorization from the depositor to make such 
payments or transfers in connection with checks or drafts drawn 
upon the bank, pursuant to terms and conditions prescribed by the 
Board.". 
(b) Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(g)) is amended by inserting "(1)" after "(g)" and by adding at the 
end thereof the following: 
"(2) Notwithstanding the provisions of paragraph (1), an insured 
nonmember bank may permit withdrawals to be made automatically 
from a savings deposit that consists only of funds in which the entire 
beneficial interest is held by one or more individuals through pay-
ment to the bank itself or through transfer of credit to a demand 
deposit or other account pursuant to written authorization from the 
depositor to make such pa3anents or transfers in connection with 
checks or drafts drawn upon the bank, pursuant to terms and 
conditions prescribed by the Board of Directors.". 
SEC. 102. Section 5(b)(1) of the Home Owners' Loan Act of 1933 (12 
U.S.C. 1464(b)(1)) is amended by adding at the end thereof the 
following: "This section does not prohibit the establishment of remote 
service units by associations for the purpose of crediting existing 
savings accounts, debiting such accounts, crediting payments on 
loans, and the disposition of related financial transactions as pro-
vided in regulations prescribed by the Board.". 
SEC. 103. (a) Section 101 of the Federal Credit Union Act is 
amended— 
(1) by inserting before the semicolon at the end of paragraph (5) 
the following: ", and such term also includes a share draft 
account"; 
(2) by striking out "and" at the end of paragraph (8); 
(3) by striking out the period at the end of paragraph (9) and 
inserting in lieu thereof"; and"; and 
(4) by adding at the end thereof the following: 
Dec. 28, 1979 
[H.R. 4998] 
Automatic 
transfer 
accounts at 
commercial 
banks, 
authorization. 
Remote service 
units. 
12 use 1752. 
59-194 0 — 81 
80 : QL3 
93 STAT. 1234 
PUBLIC LAW 96-161—DEC. 28, 1979 
"Share draft 
account." 
12 use 1757. 
Effective date. 
12 use 371a 
note. 
12 use 1735f-7 
note 
12 use 1735f-5. 
"Depository 
institution." 
18 use 709, 709 
note. 
12 use 1730a. 
12 use 1752. 
"(10) the term 'share draft account' means an account on 
which payment of interest may be made on a deposit with respect 
to which the credit union may require the member to give notice 
of an intended withdrawal not less than thirty days before the 
withdrawal is made, even though in practice such notice is not 
required and the member is allowed to make withdrawals by 
negotiable or transferable instrument for the purpose of making 
payments to third persons or otherwise. Such account shall 
consist solely of funds in which the entire beneficial interest is 
held by one or more individuals, or by an organization operated 
primarily for religious, philanthropic, charitable, educational, or 
other similar purpose and not for profit.". 
(b) Section 107(6) of such Act is amended by inserting before the 
semicolon at the end thereof the following: ", and to issue, deal in, and 
accept share drafts as orders of withdrawal against shares, subject to 
such terms, rates, and conditions as may be prescribed by the Board". 
SEC, 104. The amendments made by sections 101 through 103 of this 
title shall take effect on December 31,1979, and shall remain in effect 
until the close of March 31,1980. 
SEC. 105. (a)(1) The provisions of the constitution or law of any State 
expressly limiting the rate or amount of interest, discount points, or 
other charges which may be charged, taken, received, or reserved 
shall not apply to any loan, mortgage, or advance which is— 
(A) secured by a first lien on residential real property or by a 
first lien on stock in a residential cooperative housing corpora-
tion where the loan, mortgage, or advance is used to finance the 
acquisition of such stock; 
(B) made after the date of enactment of this Act; and 
(C) described in section 527(b) of the National Housing Act, 
except that the limitation described in section 527(b)(1) that the 
property must be designed principally for the occupancy of from 
one to four families shall not apply, the requirement contained in 
section 527(b)(1) that the loan be secured by residential real 
property shall not apply to a loan secured by stock in a residen-
tial cooperative housing corporation, and for the purpose of this 
section, the term "lender" in section 527(b)(2)(A) of the National 
Housing Act shall also be deemed to include any lender approved 
by the Secretary of Housing and Urban Development for partici-
pation in any mortgage insurance program under the National 
Housing Act. 
(2) The provisions of the constitution or law of any State expressly 
limiting the rate or amount of interest which may be charged, taken, 
received, or reserved shall not apply to any deposit or account held 
by, or other obligation of a depository institution. As used in this 
paragraph, the term "depository institution" means— 
(A) any insured bank as defined in section 3 of the Federal 
Deposit Insurance Act; 
(B) any mutual savings bank as defined in section 3 of the 
Federal Deposit Insurance Act; 
(C) any savings bank as defined in section 3 of the Federal 
Deposit Insurance Act; 
(D) any member as defined in this section; 
(E) any insured institution as defined in section 408 of the 
National Housing Act; and 
(F) any insured credit union as defined in section 101(7) of the 
Federal Credit Union Act. 
O
t
>
) The provisions of subsection (a)(1) shall apply to loans, mort-
gages, and advances made in any State unless and until the State 
PUBLIC LAW 96-161—DEC. 28, 1979 
93 STAT. 1235 
adopts a provision of law (prior to the close of March 31,1980) limiting 
the rate or amount of interest, discount points, or other charges on 
any such loan, mortgage, or advance, except that at any time after 
the date of enactment of this Act any State may adopt a provision of 
law placing limitations on discount points or such other charges on 
any such loan, mortgage, or advance. 
(c) The Federal Home Loan Bank Board is authorized to issue rules Rules and 
and regulations and to publish interpretations governing the imple- regulations. 
mentation of this section. 
(d) The provisions of subsection (aXD expire at the close of March Expiration date. 
31, 1980, except that such provisions shall continue to apply to any 
loan, mortgage, or advance described in subsection (a)(1) for the 
duration of such loan, mortgage, or advance if it is made prior to such 
expiration or if it is made during the two-year period beginning on 
the date of enactment of this Act pursuant to a commitment issued 
prior to such expiration. 
(e) For the purpose of this Act and any amendment made by this "State." 
Act, the term "State" includes the several States, Puerto Rico, the 
District of Columbia, Guam, the Trust Territories of the Pacific 
Islands, and the Virgin Islands. 
SEC. 106. Section 2(a) of Public Law 93-100 (12 U.S.C. 1832(a)) is 
amended by inserting "New Jersey," after "New York,". 
TITLE II—INTEREST RATE AMENDMENTS REGARDING 
STATE USURY CEILINGS ON CERTAIN LOANS 
SEC. 201. Section 5197 of the Revised Statutes, as amended (12 
U.S.C. 85), is amended by inserting in the first and second sentences 
before the phrase "whichever may be the greater", the following: "or 
in the case of business or agricultural loans in the amount of $25,000 
or more, at a rate of 5 per centum in excess of the discount rate on 
ninety-day commercial paper in effect at the Federal Reserve bank in 
the Federal Reserve district where the bank is located,". 
SEC. 202. The Federal Deposit Insurance Act (12 U.S.C. 1811-1831) 
is amended by inserting after section 23 the following new section: 
"SEC. 24. (a) In order to prevent discrimination against State- 12 use I83ia. 
chartered insured banks with respect to interest rates, if the applica-
ble rate prescribed in this subsection exceeds the rate such State 
bank would be permitted to charge in the absence of this subsection, a 
State bank may in the case of business or agricultural loans in the 
amount of $25,000 or more, notwithstanding any State constitution or 
statute, which is hereby preempted for the purposes of this section, 
take, receive, reserve, and charge on any loan or discount made, or 
upon any note, bill of exchange, or other evidence of debt, interest at 
a rate of not more than 5 per centum in excess of the discount rate on 
ninety-day commercial paper in effect at the Federal Reserve bank in 
the Federal Reserve district where the bank is located, and such 
interest may be taken in advance, reckoning the days for which the 
note, bill, or other evidence of debt has to run. 
"(b) If the rate prescribed in subsection (a) exceeds the rate such 
State bank would be permitted to charge in the absence of this 
paragraph, and such State fixed rate is thereby preempted by the rate 
described in subsection (a), the taking, receiving, reserving, or charg-
ing a greater rate of interest than is allowed by subsection (a) when 
knowingly done, shall be deemed a forfeiture of the entire interest 
which the note, bill, or other evidence of debt carries with it, or which 
has been agreed to be paid thereon. If such greater rate of interest has 
been paid, the person who paid it may recover in a civil action 
93 STAT. 1236 
PUBLIC LAW 96-161—DEC. 28, 1979 
12 use 1730e. 
15 use 687. 
"Federal 
Reserve rate.' 
commenced in a court of appropriate jurisdiction not later than two 
years after the date of such payment, an amount equal to twice the 
amount of the interest paid from the State bank taking or receiving 
such interest" 
SEC. 203. Title IV of the National Housing Act (12 U.S.C. 
1724-1730f) is amended by inserting after section 411 the following 
new section: 
"SEC. 412. (a) If the applicable rate prescribed in this section 
exceeds the rate an insured institution would be permitted to charge 
in the absence of this section, such institution may in the case of 
business or agricultural loans in the amount of $25,000 or more, 
notwithstanding any State constitution or statute, which is hereby 
preempted for the purposes of this section, take, receive, reserve, and 
charge on any loan or discount made, or upon any note, bill of 
exchange, or other evidence of debt, interest at a rate of not more 
than 5 per centum in excess of the discount rate on ninety-day 
commercial paper in effect at the Federal Reserve bank in the 
Federal Reserve district where the institution is located, and such 
interest may be taken in advance, reckoning the days for which the 
note, bill, or other evidence of debt has to run. 
"(b) If the rate prescribed in subsection (a) exceeds the rate such 
institution would be permitted to charge in the absence of this 
section, and such State fixed rate is thereby preempted by the rate 
described in subsection (a), the taking, receiving, reserving, or charg-
ing a greater rate of interest than that prescribed by subsection (a), 
when knowingly done, shall be deemed a forfeiture of the entire 
interest which the note, bill, or other evidence of debt carries with it, 
or which has been agreed to be paid thereon. If such greater rate of 
interest has been paid, the person who paid it may recover, in a civil 
action commenced in a court of appropriate jurisdiction not later 
than two years after the date of such payment, an amount equal to 
twice the amount of the interest paid from the institution taking or 
receiving such interest.". 
SEC. 204. Subsection (h) of section 308 of the Small Business 
Investment Act of 1958 is amended to read as follows: 
"(h)(1) The purpose of this subsection is to facilitate the orderly and 
necessary flow of long-term loans and equity funds to small business 
investment companies to small business concerns. 
"(2) In the case of a business loan the principal amount of which is 
$25,000 or more, the small business investment company making 
such loan may charge interest on such loan at a rate which does not 
exceed the lowest of the rates described in subparagraphs (A), (B), and 
(C). 
"(A) The rate described in this subparagraph is the maximum 
rate prescribed by regulation by the Small Business Administra-
tion for loans made by any small business investment company 
(determined without regard to any State rate incorporated by 
such regulation). 
"(B) The rate described in this subparagraph is the maximum 
rate authorized by an applicable State law which is not 
preempted for purposes of this subsection. 
"(C)(i) The rate described in this subparagraph is the higher of 
the Federal Reserve rate or the maximum rate authorized by 
applicable State law (determined without regard to the preemp-
tion of such State law). 
"(ii) For purposes of clause (i), the term 'Federal Reserve rate' 
means the rate equal to the sum of 5 percentage points plus the 
discount rate on ninety-day commercial paper in effect at the 
PUBLIC LAW 96-161—DEC. 28, 1979 
93 STAT. 1237 
Federal Reserve bank in the Federal Reserve district in which 
the principal office of the small business investment company is 
located. 
"(iii) The rate described in this subparagraph shall not apply to 
loans made in a State if there is no maximum rate authorized by 
applicable State law for such loans or there is a maximum rate 
authorized by an applicable State law which is not preempted for 
purposes of this subsection. 
"(3) A State law shall be preempted for purposes of paragraph (2)(B) 
with respect to any loan if such loan is made before the earliest o
f
— 
"(A) in the case of a State statute, July 1,1980; 
"(B) the date, after the date of the enactment of this para-
graph, on which such State adopts a law stating in substance that 
such State does not want this subsection to apply with respect to 
loans made in such State; or 
"(C) the date on which such State certifies that the voters of 
such State, after the date of the enactment of this paragraph, 
have voted in favor of, or to retain, any law, provision of the 
constitution of such State, or amendment to the constitution of 
such State which prohibits the charging of interest at the rates 
provided in this subsection. 
"(4)(A) If the maximum rate of interest authorized under para-
graph (2) on any loan made by a small business investment company 
exceeds the rate which would be authorized by applicable State law if 
such State law were not preempted for purposes of this subsection, 
the charging of interest at any rate in excess of the rate authorized by 
paragraph (2) shall be deemed a forfeiture of the greater of (i) all 
interest which the loan carries with it, or (ii) all interest which has 
been agreed to be paid thereon. 
"(B) In the case of any loan with respect to which there is a 
forfeiture of interest under subparagraph (A), the person who paid 
the interest may recover from a small business investment company 
making such loan an amount equal to twice the amount of the 
interest paid on such loan. Such interest may be recovered in a civil 
action commenced in a court of appropriate jurisdiction not later 
than two years after the most recent payment of interest.". 
SEC. 205. (a) In order to prevent discrimination against any finan- 1
2 use 86a. 
cial institution chartered pursuant to the statutes of the United 
States with respect to interest rates, if the applicable rate prescribed 
in this section exceeds the rate such federally chartered financial 
institution would be permitted to charge in the absence of this 
section, the federally chartered financial institution may in the case 
of business or agricultural loans in the amount of $25,000 or more, 
notwithstanding any State constitution or statute, which is hereby 
preempted for the purposes of this section, take, receive, reserve, and 
charge on any loan, interest at a rate of not more than 5 per centum 
in excess of the discount rate on ninety-day commercial paper in 
effect at the Federal Reserve bank in the Federal Reserve district 
where the federally chartered financial institution is located. 
(b) If the rate prescribed in subsection (a) exceeds the rate such 
federally chartered financial institution would be permitted to 
charge in the absence of this section, and such State fixed rate is 
thereby preempted by the rate described in subsection (a), the taking, 
receiving, reserving, or charging a greater rate than is allowed by 
subsection (a), when knowingly done, shall be deemed a forfeiture of 
the entire interest which the loan carries with it, or which has been 
agreed to be paid thereon. If such greater rate of interest has been 
paid, the person who paid it may recover, in a civil action commenced 
93 STAT. 1238 
PUBLIC LAW 96-161—DEC. 28, 1979 
Savings 
provision. 
12 u s e 1831a 
note. 
Effective dates. 
12 u s e 1831a 
note. 
12 u s e 371b-l. 
in a court of appropriate jurisdiction not later than two years after 
the date of such payment, an amount equal to twice the amount of 
interest paid from the federally chartered financial institution taking 
or receiving such interest. 
SEC, 206. If any provision of this title or the application of such 
provision to any person or circumstance shall be held invalid, the 
remainder of the title and the application of such provision to any 
person or circumstance other than that as to which it is held invalid 
shall not be affected thereby. 
SEC. 207. The amendments made by sections 201 through 205 of this 
title and the provisions of sections 201 through 205 of this title shall 
apply only with respect to loans made in any State during the period 
beginning on the date of enactment of this Act and ending on the 
earliest o
f
— 
(1) in the case of a State statute, July 1,1980; 
(2) the date, after the date of the enactment of this Act, on 
which such State adopts a law stating in substance that such 
State does not want the amendments made by sections 201 
through 205 of this title and the provisions of this title to apply 
with respect to loans made in such State; or 
(3) the date on which such State certifies that the voters of such 
State, after the date of the enactment of this Act, have voted in 
favor of, or to retain, any law, provision of the constitution of 
such State, or amendment to the constitution of such State which 
prohibits the charging of interest at the rates provided in the 
amendments made by sections 201 through 205 of this title and 
the provisions of this title. 
SEC. 208. Section 19 of the Federal Reserve Act (12 U.S.C. 461 et 
seq.) is amended by inserting after subsection (j) the following new 
subsection: 
"(k) No member bank or affiliate thereof, or any successor or 
assignee of such member bank or affiliate or any endorser, guarantor, 
or surety of such member bank or affiliate may plead, raise, or claim 
directly or by counterclaim, setoff, or otherwise, with respect to any 
deposit or obligation of such member bank or affiliate, any defense, 
right, or benefit under any provision of a statute or constitution of a 
State or of a territory of the United States, or of any law of the 
District of Columbia, regulating or limiting the rate of interest which 
may be charged, taken, received, or reserved, and any such provision 
is hereby preempted, and no civil or criminal penalty which would 
otherwise be applicable under such provision shall apply to such 
member bank or affiliate or to any other person.". 
SEC. 209. Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 
1828) is amended by inserting after subsection (j) the following new 
subsection: 
"(k) No insured nonmember bank or affiliate thereof, or any 
successor or assignee of such bank or affiliate or any endorser, 
guarantor, or surety of such bank or affiliate may plead, raise, or 
claim, directly or by counterclaim, setoff, or otherwise, with respect 
to any deposit or obligation of such bank or affiliate, any defense, 
right, or benefit under any provision of a statute or constitution of a 
State or of a territory of the United States, or of any law of the 
District of Columbia, regulating or limiting the rate of interest which 
may be charged, taken, received, or reserved, and any such provision 
is hereby preempted, and no civil or criminal penalty which would 
otherwise be applicable under such provision shall apply to such bank 
or affiliate or to any other person.". 
PUBLIC LAW 96-161—DEC. 28, 1979 
93 STAT. 1239 
Effective dates. 
12 use 371b-l 
note. 
SEC. 210. Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 
1425b) is amended by inserting after subsection (d) the following new 
subsection: 
"(e) No member or nonmember association, institution, or bank or 
affiliate thereof, or any successor or assignee, or any endorser, 
guarantor, or surety thereof may plead, raise, or claim, directly or by 
counterclaim, setoff, or otherwise, with respect to any deposit or 
obligation of such member or nonmember association, institution, 
bank, or affiliate, any defense, right, or benefit under any provision of 
a statute or constitution of a State or of a territory of the United 
States, or of any law of the District of Columbia, regulating or 
limiting the rate of interest which may be charged, taken, received, or 
reserved, and any such provision is hereby preempted, and no civil or 
criminal penalty which would otherwise be applicable under such 
provision shall apply to such member or nonmember association, 
mstitution, bank, or affiliate or to any other person.". 
SEC. 211. The amendments made by sections 208, 209, and 210 of 
this title shall apply only with respect to deposits made or obligations 
issued in any State during the period beginning on the date of the 
enactment of 
this Act and ending on the earliest o
f
— 
(1) in the case of 
a State statute, July 1,1980; 
(2) the date, after the date of the enactment of this Act, on 
which such State adopts a law stating in substance that such 
State does not want the amendments made by sections 208, 209, 
and 210 of this title to apply with respect to such deposits and 
obligations; or 
(3) the date on which such State certifies that the voters of such 
State, after the date of the enactment of this Act, have voted in 
favor of, or to retain, any law, provision of the constitution of 
such State, or amendment to the constitution of such State which 
limits the amount of interest which may be charged in connec-
tion with such deposits and obligations. 
SEC. 212. Effective at the close of the day preceding the date of 
enactment of this title, the Act entitled "An Act lo authorize on a 
temporary basis certain business and agricultural loans, notwith-
standing interest limitations in State constitutions or statutes, and 
for other purposes" (Public Law 96-104), and the amendments made Ante, p. 789. 
by such Act, are repealed, except that— 
(1) the amendments made by title I of such Act and the 
provisions of such title shall apply to any loan made in any State 
on or after November 5, 1979, but prior to such repeal; and 
Repeal. 
12 use 85 note. 
93 STAT. 1240 
PUBLIC LAW 96-161—DEC. 28, 1979 
Ante, p. 792. 
(2) the amendments made by title 11 of such Act shall apply to 
any deposit made or obligation issued in any State on or after 
November 5,1979, but prior to such repeal. 
Wf?^i^l^^^\ 
SEC. 213. Notwithstanding any other provision of this title, subject 
1
2 use 86a note. ^ sections 207 (2) and (3) and 211 (2) and (3) of this Act and section 
1
5 use 687. 
308(h)(3) (B) and (C) of 
the Small Business Investment Act of 1958, the 
provisions of 
this title shall continue to apply until July 1,1981, in the 
case of any State having a constitutional provision regarding maxi-
mum interest rates. 
Approved December 28, 1979. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 96-421 (Oomm. on Banking, Finance, and Urban Affairs). 
SENATE REPORT No. 96-423 (Comm. on Banking, Housing, and Urban Affairs). 
eONGRESSIONAL REOORD, Vol. 125 (1979): 
Sept. 17, considered and passed House. 
Dec. 10, considered and passed Senate, amended. 
Dec. 17, House concurred in Senate amendments with amendments. 
Dec. 18, Senate concurred in House amendments with an amendment. 
Dec. 19, House concurred in Senate amendment with an amendment; Senate 
concurred in House amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 15, No. 52: 
Dec. 28, Presidential statement.