Depository Institutions Deregulation Committee – DIDC

AAA

DEFINITION of 'Depository Institutions Deregulation Committee – DIDC'

A six-member committee established by the Depository Institutions Deregulation and Monetary Control Act of 1980, which had the primary purpose of phasing out interest rate ceilings on deposit accounts by 1986.

The six members of the Committee were the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve System, the Chairman of the FDIC, the Chairman of the Federal Home Loan Bank Board (FHLBB), and the Chairman of the National Credit Union Administration Board (NCUAB) as voting members, and the Comptroller of the Currency as a non-voting member.

Besides the phase out of interest rate ceilings, the Committee's other tasks included devising new financial products that would allow thrifts to compete with with money funds and to eliminate ceilings on time deposits. But its overall purpose was to deregulate bank interest rates.

INVESTOPEDIA EXPLAINS 'Depository Institutions Deregulation Committee – DIDC'

Since 1933, Regulation Q had limited the interest rates banks could pay on their deposits; these restrictions were extended to Savings & Loans in 1966. As inflation rose sharply in the late 1970s, however, more money was being withdrawn from regulated passbook savings accounts than was deposited, and S&Ls found it increasingly difficult to obtain and secure funds. At the same time, they carried a huge number of long-term loans at low interest rates. As interest rates kept rising, the thrifts found themselves increasingly unprofitable and becoming insolvent. The Monetary Control Act of 1980 and the DIDC were all part of an effort to restore solvency to the thrift industry - an effort that ultimately failed, as S&L managements were ill-equipped to operate in the deregulated environment, that was created.

RELATED TERMS
  1. Volcker Rule

    The Volcker rule separates investment banking, private equity ...
  2. Regulation L

    One of the regulations set forth by the Federal Reserve. Regulation ...
  3. Depository Institutions Act of ...

    A law passed by Congress with the intent of making savings and ...
  4. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
  5. Regulation Q

    A Federal Reserve Board regulation that prohibited banks from ...
  6. Deregulation

    The reduction or elimination of government power in a particular ...
Related Articles
  1. How a Monopoly Works
    Economics

    How a Monopoly Works

  2. What methods can the government use ...
    Bonds & Fixed Income

    What methods can the government use ...

  3. How A Limited Government Affects A Country's ...
    Economics

    How A Limited Government Affects A Country's ...

  4. How to Register Your Trademark
    Investing

    How to Register Your Trademark

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center