After some tinkering and tailoring to appease the nation's banks, a bill to bolster membership in the Federal Reserve System comes up again for a House banking committee vote in two weeks.
Changes in Fed rules have bee percolating in Congress in recent months at the urging of central bank officials increasingly disturbed by the faster rate at which banks have been leaving th e system.
With fewer memebers, the Fed fears its ability to control the money supply-and fight inflation-will weaken. And so might its political base.
One reform attempt lost narrowly in committee last month, 21 to 20. But House Banking Committee Chairman Henry Reuss (D.-Wis.) announced yesterday that a revised version of the bill would be put to vote April 25.
The new version includes several concessions to the nation's banks that, by and large, had been against the earlier bill. Most significantly, the new bill would reduce the amount of money member banks must keep on reserve with the Fed.
However, the legislation is still apt to draw opposition from the banking lobby because in principle it differs little from the initial version.
It still proposes to change the reserve accounts from voluntary to mandatory for large and medium-sized banks and it stil does not provide for interest payments on reserves held by the Red.
The banks would prefer to keep the Fed system voluntary. The exodus of members from the system, they note, is the result of simple economics - members must keep reserves on deposit with the central bank but the banks doesn't pay interest on those reserves.
If the Fed wants members back say the banks, all it has to do is sweeten the incentive-namely, drop the reserve levels and start paying interest.
Nonetheless, Reuss thinks he has the votes this time to vote a mandatory-reserve bill out of committee. The revised version was not his design. It was offered by Rep. William Moorehead (D-Pa.), who voted "no" on the earlier version, and Rep. Doug Bernard (D-Ga.) who abstained.