On this day March 31 1980 President Jimmy Carter signed into law a major piece of financial legislation that began the process of deregulating the banking industry. The Depository Institutions Deregulation and Monetary Control Act aimed to modernize the financial system in response to rising inflation and growing competition between banks and nonbank institutions.
The law allowed banks to offer new types of accounts and gradually eliminated interest rate caps on deposit accounts. It also extended Federal Reserve oversight to more financial institutions and increased federal deposit insurance. This act marked a turning point in U.S. financial policy and laid the groundwork for further deregulation throughout the 1980s and 90s.
80s insight: The act allowed for the creation of the now familiar Negotiable Order of Withdrawal (NOW) accounts which let banks pay interest on checking deposits for the first time.