7. The savings and loan crisis Which of the following were provisions of the Mon

Question

7. The savings and loan crisis

Which of the following were provisions of the Monetary Control Act of 1980? Check all that apply.

a. The act allowed commercial banks to have lower interest rate ceilings than savings and loan associations (S&Ls).

b. The act allowed the Federal Reserve to set uniform reserve requirements for all commercial banks.

c. The act allowed commercial banks to pay unrestricted interest rates on checking accounts.

d. The act gave all depository institutions access to federal loan reserves, check clearing services, and other services provided by the Federal Reserve

Explanation / Answer

Depository Institutions Deregulation and Monetary Control Act of 1980 was enacted with main aim of deregulation of financial institutions that accept deposits from depositors as well as to enhance the sphere of control of Federal Reserve over various depository institutions so that Fed's control over monetary policy can be implemented.

Important provisions of this Act are as follows:

b. This Act brought the all depository institutions under the reserve requirement gambit of Federal Reserve.

c. This Act has done away with the interest-rate ceiling and provided freedom to depository institutions especially commercial banks to determine interest rates they want to pay to depositors.

d. This Act opens up the services as rendered by the Fed to all depository institutions.

Hence, the correct answer is option (b), (c), and (d).

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