August 1988

The Federal Reserve System:
An Overview of Times and Events

Regulatory Policy Environment

1900-1919
Bank examination division established in the department of the
Federal Reserve agent/1919

1920s

1930s
Collapse of agricultural markets and ensuing depression are key factors in reduction of Ninth District banks by 40 percent during the 1930s
About 10,000 banks fail nationwide/1930-33
Interest on demand deposits prohibited
Regulation Q introduced—limits interest rates on savings and time deposits; ceilings set at rates well above prevailing practice
Securities credit Regulations T and U issued

1940s
Selective controls on consumer credit (Regulation W) and real estate credit (Regulation X) introduced as wartime measures

1950s
Selective credit controls reinstated during Korean War

1960s
Incentives to circumvent Regulation Q ceilings heighten throughout '60s. Regulation Q ceilings raised in realignment with market rates/1962-64

1970s
Regulation Q ceilings raised in 1970, 1973 and 1979, and
taken off large CDs in 1970
Interest-paying NOW accounts appear in New England states/1974
Real estate investment trusts (REITs) cause problems for some banks/1974-75
Money market mutual funds accelerate growth, drain some consumer deposits from banks/1977

1980s
Voluntary credit restraint program introduced
Money market deposit accounts authorized, giving limited check capabilities to interest-paying savings accounts/1982
Super NOW accounts authorized/1983
Regulation Q ceilings effectively phased out/1986
International risk-based capital requirements adopted/1988

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