The technical-sounding title of a new law -- the Depository Institutions Deregulation and Monetary Control Act of 1980 -- almost guarantees that few persons will ever actually read its complicated provisions.
Yet the measure -- enacted early this year with few dissenting votes -- raises in the minds of its critics the possibility that US citizens could some day be subjected to the kind of "hyperinflation" that ravaged Germany during the early 1950s. Berlin's government printing presses were churning out millions of dollars of worthless paper currency.
Further, critics insist, the act adds up to an unchecked delegation of power by Congress to a broad range of unelected officials. These run the gamut from the powerful Federal Reserve Board, to the Comptroller of the Currency, to the nation's top private bankers.
At the very least, say analysts here, the enactment of the law underscores the growing complexity of federal monetary and banking regulation here. Also, analysts say, the law tends to pinpoint the growing split within conservative economic circles between the so-called "traditional" conservatives -- who disdain government controls but doubt the feasibility of returning the United States to a gold standard -- and more zealous advocates of gold and other precious metals who fear rapid paper currency inflation.
Congress, through the monetary act, has "built a mechanism whereby it can stop a [financial] collapse of the US banking system," argues Donald S. McAlvany , president of the Denver-based gold and Monetary Report, a small gold-oriented economic publication.
But "in doing so," maintains Mr. McAlvany, Congress has provided the tools for "substantial expansion of credit and currency in our society. . . ." This adds up, he says, to "a very, very inflationary piece of legislation."
Rep. Ron Paul (R) of Texas, considered a staunch conservative, calls the new law "unprecedented" and argues that it means the government is "defaulting" when it comes to the stability of the US dollar. Mr. Paul was one of a handful of lawmakers who voted against the measure in March, when it roared through the US House of Representatives by a whopping 380-to-13 vote and sailed past the Senate by voice vote.
Most private economists, however, as well as mainstream conservatives, counter that there is no reason for concern about the new law. "I'm not really bothered by this law," argues Dr. Beryl W. Sprinkel, vice-president and chief economist of the Harris Bank in Chicago.
"I've never seen the arguments that convince me of the horror stories told about this legislation," argues Howard Segermark, a monetary economist working in the office of conservative Sen. Jesse A. Helms (R) of North Carolina.
Mr. Segermark, who is also executive director of the Institute of Money and Inflation, a research group here, maintains that many of the main provisions of the legislation "are already on teh books to begin with."
Ironically, the debate over the Monetary Control Act still is largely hidden away from the public -- taking place these days largely in the small gold- and silver-oriented publications.
There is little question here among analysts that the Monetary Control Act will go down in the legislative books as one of the more significant bank regulatory laws enacted in the nation's history.
Specifically, the legislation -- a hodgepodge consolidation of more specific financial reform measures -- has a number of wide-ranging implications, most of them taking effect in January 1981:
* It vastly extends the power of Federal Reserve Board control over the US banking industry. The act brings all US depository institutions directly under the authority of the Fed.
* The act lowers reserve requirements (the mandated amounts of bank reserves that institutions must keep on hand for safety purposes), thus allowing banks to lend out larger amounts of money than ever.
For the huge Bank of America, the nation's largest commercial bank, for example, that means an additional $1.2 billion for the loan windows. For Citibank, the nation's second-largest bank, that means between $450 million and currency.
* The act expands the definition of collateral (for federal reserve credit and notes) to include a broad range of financial issues. The upshot will be that the Fed can put more federal reserve notes into circulation if needed.
It relieves the Fed from having to maintain collateral in its own vaults for federal reserve notes (greenbacks).
* It allows the Comptroller of the Currency to proclaim national bank holidays on a regional or local basis.
* The Fed, upon the vote of five out of its seven members, can suspend loan reserve requirements for a period up to 180 days. Zero reserve requirements are not excluded under this provision.
In addition, the act also provides for a broad range of more widely publicized and less technical steps, such as expanding federal insurance (FDIC) coverage on savings accounts to $100,000; gradually lifting interest rate ceilings (Regulation Q) on savings accounts; allowing interest on checking accounts (the so-called "NOW accounts") prevalent in the eastern US; allowing savings and loan associations to make some consumer loans and grant credit cards.
Still, the "sleeper" monetary provisions of the act continue to nag at gold- and precious metals-oriented conservatives. They see the danger that the Fed, and an administration facing a possible bank crash at some point, might throw the doors open to hyperinflation of the US economy.
They point, for example, to a companion bill now before Congress that would allow the preprinting of the front halves of dollar bills. The legislation, introduced by Sen. William Proxmire (D) of Wisconsin, chairman of the Senate Banking Committee, in effect would allow preprinting of half of the bills without authorization. In case of a severe banking crisis, the second half could be quickly printed at the urging of the Fed and thus distributed to troubled banks to pass into the money stream.
Dr. Sprinkel of Harris Bank maintains that much of the concern about the monetary act stems from the fact that "gold standard" persons "object to any kind of discretionary" powers for the Fed to regulate the money supply.
Moreover, Dr. Sprinkel argues, the Fed has become more "open" about its own internal money regulating decisions during recent years. For that reason alone, he says, the law would likely be administered very carefully and with due regard to public opinion.
Whatever the case, analyst here note, the debate over the meaning and impact of the Monetary Act of 1980 rages on now perhaps even more intently than before enactment of the legislation. Whether the act adds up to a terrible example of "big brother comes to banking," as critics allege, or a sound "reform" of the banking system, as proponents insist, will likely have to await any future banking crisis in the US.
But the mere thought of that alone is enough to send shivers up the spines of most bankers, government regulators, and financial analysts.