Efforts in Congress to end interest-rate restrictions on savings accounts have been multiplying. But it is still not certain that those efforts will result in legislation.
What is significant is that roughly complementary bills -- although differing in technical details -- are moving through both the Senate and House to phase out Regulation Q.
This regulation in effect imposes interest-rate ceilings on savings accounts. It is believed to be one of the reasons that billions of savings dollars have been transferred in recent years to higher-yielding financial instruments, such as money-market mutual funds.
The "anti-Regulation Q" bills in the Senate and House have one important element going for them at this time, namely that Congress appears intent this year on providing some form of tax exemption for interest earnings on savings accounts.
It is felt here that deeper congressional concern about making savings accounts attractive once more in the United States -- which has the lowest savings rate of any major industrial democracy -- will also work in favor of efforts at last to scuttle interest-rate controls on those same accounts. Further, in an election year, congressmen may be thinking of the political benefits of a tax break for savers.
In the House, Rep. Fernand St. Germain (D) of Rhode Island, the influential chairman of the financial institutions subcommittee of the House Banking Committee, is working for enactment of a bill that would phase out interest-rate ceilings within five years.
The St. German legislation, introduced here jan. 24, thus joins a bill already passed by the Senate Banking Committee that provides for a 10-year phasing out of controls.
One liberal political journal, the New Republic, has likened Regulation Q (along with the US savings bond program) to a "great savings swindle." That is because today's high inflation rate means that low-interest savings are losing purchasing power rapidly.
First enacted back in 1933 to hold down interest-rate wars between competing banking institutions, the controls were extended in 1966 to thrift institutions (savings and loan associations and mutual savings banks).
Under the ceiling, thrift institutions are allowed to pay 5 1/2 percent interest on regular passbook accounts, compared with only 5 1/j percent for commercial banks. The rationale for the differential is to support the mortgage market, which is primarily financed by thrifts.
With inflation running at 13 percent, the differential has not prevented savings from flowing out of savings institutions, especially into money-market funds. These funds now have assets of roughly $50 billion.
The House panel has a special reason for a sense of urgency about what it recommends on Regulation Q. In early March the committee is expected to have a crucial conference session with the Senate on a number of banking reforms.
The Senate has coupled at Regulations Q phase-out with legislation allowing nationwide interest-bearing checking accounts, the so-called NOW accounts.
In the House, however, the phase-out is linked to legislation that would arrest the flight of banking institutions from membership in the Federal Reserve System. The Senate is only starting to examine this "Fed" issue.
Under the new House legislation, there would be an "absolute end -- with no ifs, ands, or other . . . escape clauses" to Regulation Q by Dec. 31, 1985, according to the bill's sponsor, Mr. St. Germain.
Moreover, federal regulators would be required to raise passbook rates by one-half of 1 percent within one year of the bill's enactment.
The St. Germain proposal, however, is already being criticized by important Senate Banking Committee officials. They contend that it would not guarantee the elimination of the quarter-point differential at the end of the five-year cycle. By contrast, the Senate proposal provides for an incremental phasing out of the differential during the final eight years of the 10-year cycle proposed in the Senate.
Jay Janis, chairman of the Federal Home Loan Bank Board, which regulates savings associations, has favored the 10-year phase-out already voted by the Senate. He indicates he will study the shorter timetable proposed by Mr. St. Germain.
As a trade-off to the phase-out, thrifts are fighting hard for congressional approval of additional financial services, including NOW accounts (which appear almost certain of eventual enactment), consumer lending authority, and ability to issue credit cards.
Despite the sudden intensive activity now taking place on Capitol Hill over Regulation Q, few analysts here would be willing to predict that a phase-out will come quickly. But the momentum is at last running in that direction -- and most important -- in both chambers of Congress.