Federal law enacted by Congress in 1982 authorizing banks and savings institutions to offer a new account, the Money Market Deposit Account -a transaction account with no interest rate ceiling to compete more effectively with money market mutual funds; gave savings and loan associations the authority to make commercial loans; and gave federal regulatory agencies the authority to approve, for the first time, interstate acquisitions of failed banks and savings institutions.
The following are highlights of the numerous provisions of the act:
(1) savings and loan associations were authorized to make commercial, corporate, business, or agricultural loans up to 10% of assets after January 1, 1984.
(2) the deposit interest rate differential, allowing savings and loans and savings banks to offer rates on interest-bearing deposit accounts l⁄4 of 1% higher than commercial banks was lifted, as of January 1984.
(3) the act authorized a new capital assistance program, the Net Worth Certificate Program, under which the Federal Savings and Loan Insurance Corp. And the Federal Deposit Insurance Corp. Would purchase capital instruments called Net Worth Certificates from savings institutions with net worth to assets ratios under 3%, and would later redeem the certificates as they regained financial health.
(4) the act permitted savings associations to offer checking accounts (demand deposit accounts) to individuals and business checking accounts to customers who had other accounts.
(5) savings and loans were authorized to increase their consumer lending, from 20% to 30% of assets, and to expand their dealer lending and floor-plan loan financing.
(6) the act raised the ceiling on direct investments by savings institutions in nonresidential real estate from 20% to 40% of assets, and also allowed investment of 10% of assets in education loans for any educational purpose, and up to 100% of assets in state and municipal bonds.
(7) the act preempted state restrictions on enforcement by lenders of due-on-sale clauses in most mortgages for a three year period ending October 15, 1985, and authorized state chartered lenders to offer the same kinds of alternative mortgages permitted nationally chartered financial institutions.
(8) authorized the Comptroller of the Currency to charter Bankers' Banks, or depository institutions owned by other banks.
(9) made state chartered industrial banks eligible for federal depository insurance.
(10) raised the legal lending limit for national banks from 10% to 15% of capital and surplus.
