The Garn–St Germain Depository Institutions Act of 1982 (, , enacted October 15, 1982) is an

Act of Congress An act of Congress is a statute enacted by the United States Congress. Acts may apply only to individual entities (called Public and private bills, private laws), or to the general public (Public and private bills, public laws). For a Bill (law) ...

that

deregulated Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental Economic regulation, regulation of the economy. It became common in advanced industrial economies in the 19 ...

savings and loan association A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States, ...

s and allowed banks to provide adjustable-rate mortgage loans. It is disputed whether the act was a mitigating or contributing factor in the

savings and loan crisis The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of approximately a third of the savings and loan associations (S&Ls or thrifts) in the United States between 1986 and 1995. These thrifts were b ...

of the late 1980s. The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a

Reagan Administration Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office following his landslide victory over ...

initiative. The bill is named after its sponsors, Congressman Fernand St Germain, Democrat of

Rhode Island Rhode Island ( ) is a state in the New England region of the Northeastern United States. It borders Connecticut to its west; Massachusetts to its north and east; and the Atlantic Ocean to its south via Rhode Island Sound and Block Is ...

, and Senator

Jake Garn Edwin Jacob "Jake" Garn (born October 12, 1932) is an American politician from the U.S. state of Utah. A member of the Republican Party (United States), Republican Party, he served as a member of the United States Senate from 1974 to 1993. Garn ...

, Republican of

Utah Utah is a landlocked state in the Mountain states, Mountain West subregion of the Western United States. It is one of the Four Corners states, sharing a border with Arizona, Colorado, and New Mexico. It also borders Wyoming to the northea ...

. The bill had broad support in Congress, with co-sponsors including

Charles Schumer Charles Ellis Schumer ( ; born November 23, 1950) is an American politician serving as the senior United States senator from New York, a seat he has held since 1999. A member of the Democratic Party, he has led the Senate Democratic Caucus si ...

and

Steny Hoyer Steny Hamilton Hoyer ( ; born June 14, 1939) is an American politician and retired attorney who has served as the United States House of Representatives, U.S. representative for since 1981. He also served as House Majority Leader from 2007 to 20 ...

. The bill passed overwhelmingly, by a margin of 272–91 in the House. An important consumer change was to allow anyone to place real estate, consisting of one to four dwelling units, into their own trust without triggering the

due-on-sale clause A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the right ...

. The due-on-sale clause allows lenders to foreclose on a current loan upon transfer to another. This greatly facilitates the use of trusts to pass property to heirs and minors. It may also protect the property of wealthy or risky owners against the possibility of future lawsuits or creditors, because the trust owns the property, not the individuals at risk. The bill states "... a lender may not exercise its option pursuant to a due-on-sale clause upon ... a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property (The Garn st Germain Depository Institutions Act of 1982, (U.S.C.) 1701j-3(d)(8).) Title VIII of the act, ''Alternative Mortgage Transactions'', allowed banks to provide adjustable-rate mortgage loans. The bill's passage is considered an important shift in the Democratic Party's positioning on economic regulation, as the party had historically defended New Deal era financial regulations, but had now come to favor financial deregulation. According to a 2022 study, this shift happened as a consequence of the congressional reforms of the 1970s, which undermined parochial and Southern populist interests within the Democratic Party. These parochial and populist interests favored a decentralized banking system. The party subsequently pursued deregulatory reforms that it perceived as beneficial to savers and consumers.

List of financial regulatory authorities by country In this list of financial regulatory and supervisory authorities, central banks are only listed where they act as direct supervisors of individual financial firms, and competition authorities and takeover panels are not listed unless they are set ...

NASDAQ The Nasdaq Stock Market (; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list ...

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...

Stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for ...

Regulation D (SEC) In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt them from such registration. Re ...

;Related legislation * 1933 –

Securities Act of 1933 The Securities Act of 1933, also known as the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, and the '33 Act, was enacted by the United States Congress on May 27, 1933, during the Great Depression and afte ...

* 1934 –

Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. A land ...

* 1938 –

Temporary National Economic Committee The Temporary National Economic Committee (TNEC) was established by a joint resolution of the United States Congress on June 16, 1938, and operated until its defunding on April 3, 1941. The TNEC's function was to study the concentration of economic ...

(establishment) * 1939 –

Trust Indenture Act of 1939 The Trust Indenture Act of 1939 (TIA), codified at , supplements the Securities Act of 1933 in the case of the distribution of debt securities in the United States. Generally speaking, the TIA requires the appointment of a suitably independent and ...

* 1940 –

Investment Advisers Act of 1940 The Investment Advisers Act of 1940, codified at through , is a United States federal law that was created to monitor and regulate the activities of investment advisers (also spelled "advisors") as defined by the law. Passing unanimously in both t ...

* 1940 –

Investment Company Act of 1940 The Investment Company Act of 1940 (commonly referred to as the '40 Act) is an act of Congress which regulates investment funds. It was passed as a United States Act of Congress, Public Law () on August 22, 1940, and is codified at . Along with th ...

* 1968 –

Williams Act The Williams Act (USA) refers to 1968 amendments to the Securities Exchange Act of 1934 enacted in 1968 regarding tender offers. The legislation was proposed by Senator Harrison A. Williams of New Jersey. The Williams Act amended the Securitie ...

(Securities Disclosure Act) * 1975 –

Securities Acts Amendments of 1975 The Securities Acts Amendments of 1975 is a U.S. federal law that amended the Securities Act of 1933 and the Securities Exchange Act of 1934. It was enacted by the 94th United States Congress and signed into law by President Gerald Ford on June 4, 1 ...

* 1980 -

Depository Institutions Deregulation and Monetary Control Act The Depository Institutions Deregulation and Monetary Control Act of 1980 (, ) (often abbreviated DIDMCA or MCA) is a United States federal financial statute passed in 1980 and signed by President Jimmy Carter on March 31. Purposes DIDMCA gave ...

* 1989 -

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s. It established the Resolution Trust Corporation to close hundreds ...

* 1999 –

Gramm–Leach–Bliley Act The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, () is an act of the 106th United States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933, removing barriers in ...

* 2000 –

Commodity Futures Modernization Act of 2000 The Commodity Futures Modernization Act of 2000 (CFMA) is a United States federal law that ensures that Over-the-counter (finance), over-the-counter (OTC) Derivative (finance), derivatives remained Financial regulation, unregulated. Commodity Ex ...

* 2002 –

Sarbanes–Oxley Act The Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations. The act, , also known as the "Public Company Accounting Reform and Investor Protectio ...

* 2006 –

Credit Rating Agency Reform Act The Credit Rating Agency Reform Act () is a United States federal law whose goal is to improve ratings quality for the protection of investors and in the public interest by fostering accountability, transparency, and competition in the credit ra ...

of 2006 * 2010 –

Dodd–Frank Wall Street Reform and Consumer Protection Act The Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, is a United States federal law that was enacted on July 21, 2010. The law overhauled financial regulation in the aftermath of the Great Reces ...

References

External links

Bill summary and status

Public Law 97-320, 97th Congress, H.R. 6267: Garn–St Germain Depository Institutions Act of 1982
{{DEFAULTSORT:Garn-st Germain Depository Institutions Act 1982 in American law United States federal banking legislation Savings and loan crisis 97th United States Congress Acts of the 97th United States Congress

See also

References

Further reading

External links