View source for Garn–St. Germain Depository Institutions Act

{{Infobox U.S. legislation
| shorttitle        = Garn–St Germain Depository Institutions Act
| othershorttitles  = {{unbulleted list|Banking Affiliates Act of 1982|Deposit Insurance Flexibility Act|Net Worth Certificate Act|Thrift Institutions Restructuring Act of 1982}}
| longtitle         = 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.
| colloquialacronym = 
| nickname          = Alternative Mortgage Transaction Parity Act of 1982
| enacted by        = 97th
| effective date    = October 15, 1982
| public law url    = http://www.gpo.gov/fdsys/pkg/STATUTE-96/pdf/STATUTE-96-Pg1469.pdf
| cite public law   = 97-320
| cite statutes at large = {{usstat|96|1469}}
| acts amended    = 
| acts repealed   = 
| title amended   = [[Title 12 of the United States Code|12 U.S.C.: Banks and Banking]]
| sections created = <!--{{USC}} can be used-->
| sections amended = {{Usc-title-chap|12|3}} § 226
| leghisturl      = http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR06267:@@@R
| introducedin    = House
| introducedbill  = {{USBill|97|H.R.|6267}}
| introducedby    = [[Fernand St Germain]] ([[Democratic Party (United States)|D]]–[[Rhode Island|RI]])
| introduceddate  = May 4, 1982
| committees      = [[United States House Committee on Financial Services|House Banking, Finance, and Urban Affairs]], [[United States Senate Committee on Banking, Housing, and Urban Affairs|Senate Banking, Housing, and Urban Affairs]]
| passedbody1     = House
| passeddate1     = May 20, 1982
| passedvote1     = [http://www.govtrack.us/congress/votes/97-1982/h439 272-91]
| passedbody2     = Senate
| passedas2       = <!-- used if the second body changes the name of the legislation -->
| passeddate2     = September 24, 1982
| passedvote2     = passed voice vote, in lieu of {{USBill|97|S.|2879}}
| conferencedate  = September 30, 1982
| passedbody3     = Senate
| passeddate3     = September 30, 1982
| passedvote3     = agreed voice vote
| agreedbody3     = <!-- used when the other body agrees without going into committee -->
| agreeddate3     = <!-- used when the other body agrees without going into committee -->
| agreedvote3     = <!-- used when the other body agrees without going into committee -->
| agreedbody4     = <!-- used if agreedbody3 further amends legislation -->
| agreeddate4     = <!-- used if agreedbody3 further amends legislation -->
| agreedvote4     = <!-- used if agreedbody3 further amends legislation -->
| passedbody4     = House
| passeddate4     = October 1, 1982
| passedvote4     = agreed voice vote
| signedpresident = [[Ronald Reagan]]
| signeddate      = October 15, 1982
| unsignedpresident = <!-- used when passed without presidential signing -->
| unsigneddate    = <!-- used when passed without presidential signing -->
| vetoedpresident = <!-- used when passed by overriding presidential veto -->
| vetoeddate      = <!-- used when passed by overriding presidential veto -->
| overriddenbody1 = <!-- used when passed by overriding presidential veto -->
| overriddendate1 = <!-- used when passed by overriding presidential veto -->
| overriddenvote1 = <!-- used when passed by overriding presidential veto -->
| overriddenbody2 = <!-- used when passed by overriding presidential veto -->
| overriddendate2 = <!-- used when passed by overriding presidential veto -->
| overriddenvote2 = <!-- used when passed by overriding presidential veto -->
| amendments      = 
| SCOTUS cases    = 
}}
The '''Garn–St Germain Depository Institutions Act of 1982''' ({{USPL|97|320}}, {{USBill|97|H.R.|6267}}, enacted October 15, 1982) is an [[Act of Congress]] that [[deregulation|deregulated]] [[savings and loan association]]s and allowed banks to provide [[adjustable-rate mortgage|adjustable-rate mortgage loans]]. It is disputed whether the act was a mitigating or contributing factor in the [[savings and loan crisis]] of the late 1980s.<ref>{{cite book
 | last = Leibold
 | first = Arthur
 | editor1-last = Barth
 | editor1-first = James R.
 | editor2-last = Trimbath
 | editor2-first = Susanne
 | editor3-last = Yago
 | editor3-first = Glenn
 | chapter = Some Hope for the Future After a Failed National Policy for Thrifts
 | title = The Savings and Loan Crisis: Lessons from a Regulatory Failure
 | publisher = [[Milken Institute]]
 | isbn = 1-4020-7871-4
 | pages = [https://archive.org/details/savingsloancrisi00jame/page/58 58–59]
 | year = 2004
 | chapter-url-access = registration
 | chapter-url = https://archive.org/details/savingsloancrisi00jame/page/58
 }} (further references: {{cite book
 | last1 = Strunk
 | last2 = Case
 | title = Where Deregulation Went Wrong: A Look at the Causes Behind the Savings and Loan Failures in the 1980s
 | publisher = U.S. League of Savings Institutions
 | pages = [https://archive.org/details/wherederegulatio0000stru/page/14 14–16]
 | isbn = 978-0-929097-32-9
 | year = 1988
 | url = https://archive.org/details/wherederegulatio0000stru/page/14
 }})</ref>

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 [[Presidency of Ronald Reagan|Reagan Administration]] initiative.<ref>Reagan, Ronald.  [http://www.reagan.utexas.edu/archives/speeches/1982/101582b.htm "Remarks on Signing the Garn–St Germain Depository Institutions Act of 1982"] {{Webarchive|url=https://web.archive.org/web/20080706185957/http://www.reagan.utexas.edu/archives/speeches/1982/101582b.htm |date=2008-07-06 }} (1982-10-15).</ref>

The bill is named after its sponsors, Congressman [[Fernand St Germain]], [[Democratic Party (United States)|Democrat]] of [[Rhode Island]], and Senator [[Jake Garn]], [[Republican Party (United States)|Republican]] of [[Utah]].  The bill had broad support in Congress, with co-sponsors including [[Charles Schumer]] and [[Steny Hoyer]].<ref>[http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR06267:@@@P H.R. 6267, Cosponsors] {{Webarchive|url=https://web.archive.org/web/20150511081139/http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR06267:@@@P |date=2015-05-11 }}.</ref> The bill passed overwhelmingly, by a margin of 272–91 in the House.<ref>[http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR06267:@@@R H.R. 6267, Major Actions] {{Webarchive|url=https://web.archive.org/web/20160108144807/http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR06267:@@@R |date=2016-01-08 }}.</ref>

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]]. 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).)<ref>{{cite web | url=http://www.foreclosureforum.com/mb/messages/17090.html | title=My Analysis of the Garn st Germain Act and the Federal Regulations }}</ref>

Title VIII of the act, ''Alternative Mortgage Transactions'', allowed banks to provide [[adjustable-rate mortgage|adjustable-rate mortgage loans]].<ref>{{USPL|97|320}} [http://www.phil.frb.org/src/Garn.html Full text] {{webarchive |url=https://web.archive.org/web/20040812051734/http://www.phil.frb.org/src/Garn.html |date=August 12, 2004 }}</ref>

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.<ref>{{Cite journal |last=Barton |first=Richard |date=2022 |title=Upending the New Deal Regulatory Regime: Democratic Party Position Change on Financial Regulation |journal=Perspectives on Politics |volume=22 |issue=2 |pages=391–408 |language=en |doi=10.1017/S153759272200113X |s2cid=252061496 |issn=1537-5927|doi-access=free }}</ref>

==See also==
{{Portal|Banks}}
{{Div col}} 
* [[Securities regulation in the United States]]
* [[Commodity Futures Trading Commission]]
* [[Securities commission]]
* [[Chicago Stock Exchange]]
* [[Financial regulation]]
* [[List of financial regulatory authorities by country]]
* [[NASDAQ]]
* [[New York Stock Exchange]]
* [[Stock exchange]]
* [[Regulation D (SEC)]]
;Related legislation
* 1933 – [[Securities Act of 1933]]
* 1934 – [[Securities Exchange Act of 1934]]
* 1938 – [[Temporary National Economic Committee]] (establishment)
* 1939 – [[Trust Indenture Act of 1939]]
* 1940 – [[Investment Advisers Act of 1940]]
* 1940 – [[Investment Company Act of 1940]]
* 1968 – [[Williams Act]] (Securities Disclosure Act)
* 1975 – [[Securities Acts Amendments of 1975]]
* 1980 - [[Depository Institutions Deregulation and Monetary Control Act]]
* 1989 - [[Financial Institutions Reform, Recovery, and Enforcement Act of 1989]]
* 1999 – [[Gramm–Leach–Bliley Act]] 
* 2000 – [[Commodity Futures Modernization Act of 2000]]
* 2002 – [[Sarbanes–Oxley Act]]
* 2006 – [[Credit Rating Agency Reform Act]] of 2006
* 2010 – [[Dodd–Frank Wall Street Reform and Consumer Protection Act]]
{{Div col end}}

==References==
{{Reflist}}

==Further reading==
*{{cite journal |last=Cornett |first=Marcia Millon |author2=Tehranian, Hassan |year=1990 |title=An Examination of the Impact of the Garn–st Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans |journal=Journal of Finance |volume=45 |issue=1 |pages=95–111 |doi=10.2307/2328811 |jstor=2328811 }}

==External links==
* [http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HE00603:@@@L&summ2=m& Bill summary and status] {{Webarchive|url=https://web.archive.org/web/20160108144807/http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HE00603:@@@L&summ2=m& |date=2016-01-08 }}
* [http://www.fdic.gov/regulations/laws/rules/8000-4100.html FDIC notes on the bill]
* [https://fraser.stlouisfed.org/title/1044 Public Law 97-320, 97th Congress, H.R. 6267: Garn–St Germain Depository Institutions Act of 1982]

{{Presidency of Ronald Reagan}}
{{Bank regulation in the United States}}

{{DEFAULTSORT:Garn-st Germain Depository Institutions Act}}
[[Category:1982 in American law]]
[[Category:United States federal banking legislation]]
[[Category:Savings and loan crisis]]
[[Category:97th United States Congress]]
[[Category:Acts of the 97th United States Congress]]