Financial Institutions Act

Financial Institutions Act - Title I: Payment of Interest on Deposit Accounts - Authorizes member banks of the Federal Reserve System (and nonmember building and loan, savings and loan, and homestead associations, and cooperative banks) to pay interest on accounts requiring 30 days' notice for withdrawal from such accounts, even though such notice is not required in practice.

Directs the Federal Reserve Board and the Federal Home Loan Bank Board to consult with the Secretary of the Treasury before prescribing rules for the payment and advertisement of interest on deposits (as well as shares or withdrawable accounts in the case of the Federal Home Loan Bank Board).

Directs the Secretary of the Treasury, after consultation with appropriate specified bodies, to submit a report to Congress concerning limitation on rates of interest or dividends paid by depository institutions.

Directs depository institutions to furnish in writing specified items of information concerning terms and conditions of deposit at the time of deposit and annually thereafter.

Prohibits depository institutions from advertising calculations of percentage rate or yield based on a period in excess of one year or on the effect of any grace period; or making use of the term "profit" in referring to earnings payable on deposit.

Exempts specified transactions from such disclosure and advertising requirements.

Provides procedures for enforcing compliance with such requirements, and provides liability to the depositor in the event that disclosure requirements are violated.

Title II: Expanded Deposit Liability Powers and Reserves - Creates uniform maximum and minimum limits for reserve ratios for reserves to be maintained against: (1) demand, savings, and time deposits, and (2) demand accounts and negotiable order of withdrawal accounts in Federal Home Loan Banks.

Authorizes Federal savings and loan associations to raise capital in the form of demand accounts.

Authorizes such associations to permit withdrawal or transfer of accounts on negotiable, transferrable or nontransferrable check, order or authorization; and overdrafts; and to engage in credit card operations.

Authorizes the Board to allow Federal Reserve Banks to perform clearinghouse function for member banks and Federal Home Loan Banks and members thereof an equitable basis.

Title III: Lending and Investment Powers - Authorizes Federal savings and loan associations to invest in, sell, or service (1) consumer, real estate, and construction loans and (2) securities, commercial paper, and bankers' acceptance with specified restrictions.

Title IV: Charters for Thrift Institutions - Provides that charters for thrift institutions may authorize such institutions to provide for the financing of family and consumer needs.

Redesignates the Federal Savings and Loan Insurance Corporation as the Federal Savings Insurance Corporation.

Authorizes Federal and State mutual associations to convert to State and Federal mutual associations, respectively, under specified conditions.

Title V: Credit Unions - Extends the time limit for maturity of (1) insured loans made by Federal credit unions from 5 to 7 years; and (2) secured loans made by Federal credit unions from 10 to 12 years.

Authorizes a federally insured State credit union to invest its funds in deposit accounts (excluding demand deposits or checking accounts) of federally insured credit unions.

Creates the National Credit Union Administration Discount Fund. Provides for the capitalization of the Fund.

Authorizes the Administration of the Fund: (1) to purchase obligations from member credit unions; (2) to borrow and give security therefor and pay interest thereon; and (3) to issue obligations to the Secretary of the Treasury.

Authorizes members of the Fund to apply for advances and specifies the conditions to which such advances will be subject.

States that the Fund and its assets, except its real and tangible personal property, shall be exempt from taxation.

Title VI: Government Insured and Guaranteed Mortgage Loans - Provides that interest rates for mortgages and loans insured under the National Housing Act shall be as agreed to by the parties thereto, under the Secretary of Housing and Urban Development determines the rate to be excessive.

Title VII: To Provide For the Uniform Application of the Tax Laws To All Financial Institutions And A Credit For Interest From Qualifying Real Property Loans - Uniform Tax Treatment of Financial Institutions Title - Redefines the term "bank" for purposes of the general rules applicable to banking institutions under the Internal Revenue Code.

Changes the rules for determination of the reserve for losses for financial institutions for each taxable year.

Provides for nonrecognition of gain or loss as a result of foreclosure on any property which was security for the payment of any indebtedness. Provides that the foreclosing party's basis in such property shall be the amount of the indebtedness for which the property was secured, plus costs of acquisition.

Provides new rules for the treatment of distributions of stock to shareholders by domestic building and loan associations where such distribution does not qualify as a deduction for dividends paid on deposits.

Authorizes a deduction for the repayment of loans made before September 1, 1951, by the United States or any mutual fund established pursuant to the laws of any State to financial institutions as defined in this Act.

Provides for separate taxation under Subchapter L (relating to the taxation of insurance companies) of the life insurance business of a mutual savings bank where such life insurance business is conducted separately from the other business of a mutual savings bank.

Allows a deduction for dividends paid on deposits to banking organizations qualifying as such for purposes of the term "bank" as expanded by the provisions of this Act.

Redefines the terms "domestic building and loan association" and "cooperative bank" for the purposes of this Act.

Allows as a credit against its income tax 3.5 percent (1.5 percent in the case of an individual) of the amount of interest received or accrued from qualifying residential mortgage loans if at least 70 percent of the total assets of such corporate taxpayer are qualifying residential loans. Defines the term "qualifying residential loan" for the purposes of this Act. Provides that if such credit (together with other specified tax credits allowable) exceeds the income tax for such taxable year, the taxpayer will be allowed to carry such credit back to the three taxable years preceding the unused credit year; and to the seven taxable years following the unused credit year. States that in the case of estates and trusts, and in the case of small business corporations electing taxation directly to shareholders under Subchapter S, the interest from qualifying residential mortgage loans shall be allocated among the parties in the same proportion as the income received by such entities is distributable to the benficiaries or shareholders.

Makes the necessary conforming and technical amendments to bring the related provisions of the Internal Revenue Code into consonance with the provisions of this Act.