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 As inflation rose sharply in the late 1970s, however, more money was being withdrawn from regulated passbook savings accounts than was deposited, and S&Ls found it increasingly difficult to obtain and secure funds.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. Deregulation

    The reduction or elimination of government power in a particular ...
  5. Regulation Q

    A Federal Reserve Board regulation that prohibited banks from ...
  6. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
Related Articles
  1. Personal Finance

    How Minimum Wage Impacts Unemployment

    We explain how the minimum wage affects unemployment, public assistance, and the economy overall.
  2. Economics

    What is the difference between Economic Value Added (EVA) and Market Value Added (MVA)?

    Learn how economic value added (EVA) and market value added (MVA) company valuations differ and the circumstances under which investors should consider each calculation.
  3. Economics

    How does a high discount rate affect the economy?

    Find out what would happen if the Federal Reserve decided to set a very high discount rate, the rate at which banks can borrow money from the Federal Reserve.
  4. Economics

    Market Economy

    In a market economy, economic decisions and prices are determined by market forces rather than by central planning.
  5. Economics

    In what instances is quantitative easing used?

    Discover when, how and why the Federal Reserve and other central banks turn to quantitative easing to stimulate economic activity.
  6. Entrepreneurship

    How is venture capital regulated by the government?

    Learn about some of the ways in which the U.S. government and the Securities and Exchange Commission regulate venture capital.
  7. Economics

    What country is the world's largest coal producer?

    Producing nearly 50% of the world's supply, China is the world's largest global coal producer and a large force in global coal pricing and trade.
  8. Economics

    How does the Federal Reserve determine the discount rate?

    Learn about the several different kind of discount rates offered to banks and other depository institutions through the Federal Reserve's discount window.
  9. Trading Strategies

    How safe an investment is a certificate of deposit?

    Discover certificates of deposit, their basic makeup and numerous variations, and understand why they are some of the safest investments available.
  10. Fundamental Analysis

    What is the affect of the invisible hand on consumers?

    Discover how consumers help initiate and benefit from the invisible hand of the market, which naturally coordinates trade in an exchange economy.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center