Bill Approved To Require Fed Deposits
A bill i|imed at stopping the exodus of banks from the Federal Reserve System won approval yesterday from the House Banking Committee.</br></br>By a 26-14 vote, the committee sent to the full House a bill that would re- -quire the nationÛªs 510 largest banks to < post money in reserve with the Fed-' even if they are not members.</br></br>Rep. Henry Reuss (D-Wis.) the panelÛªs chairman, described the vote as ÛÏhistoric.Û comparing the actionÛªs importance with the creation of the Fed in 1913.</br></br>In recent years, an increasing number of banks have been avoiding the reserve requirement by leaving the Fed, a trend that administration officials said threatened the Federal Reserve SystemÛªs ability to combat inflation.</br></br>The Fed uses its control over reserves to tighten or loosen credit and thus cool down or stimulate the economy, a weapon used in the battle against inflation.