Principal Regulatory Agencies

1
Principal Regulatory Agencies

• Federal Reserve System
• Supervises and examines all state-chartered
  member banks and bank holding companies
• Approves all branching and merger activities for
  member banks
• Umbrella supervisor for financial holding
  companies
• Sets reserve requirements
• Charters and supervises international banking
  corporations operating in the US and US bank
  activities in other countries

2
Principal Regulatory Agencies

• Comptroller of the Currency (OCC)
• Issues charters for new national banks
• Supervises and examines all national banks
• Approves all national bank applications for
  branches and mergers

3
Principal Regulatory Agencies

• FDIC
• Insures deposits of federally supervised
  depository institutions confirming to its
  regulations
• Approves branching and merger activities of
  insured banks
• Requires all insured banks to submit reports of
  financial conditions

4
Principal Regulatory Agencies

• DOJ
• Reviews mergers to gauge impact on competition
• SEC
• Approves equity/debt issuances of banks
• Oversees activities of bank security affiliates
• State Boards or Commissions
• Issues charters for new depository institutions
• Supervises and examines state-chartered banks
• Kansas website http//www.osbckansas.org/

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Dual Banking System

• Both state chartered and federally chartered
  banks
• Long historic argument regarding the
  establishment of a national banking system
• Alexander Hamilton, First Bank of the United
  States
• Establishment of national banking system did not
  eliminate state banks
• Issuance of national bank note currency -- 1861

6
National Banking Act (1863,1864)

• Passed During the Civil War to Help Fund the War
• Created A New Division of the Treasury, the
  Comptroller of the Currency
• Created National Banks with a Federal Charter

7
Federal Reserve Act of 1913

• Passed After a Series of Financial Panics at the
  Beginning of the Century
• Created the Federal Reserve System
• Gave the Fed the Authority to Act as the Lender
  of Last Resort
• Created to Provide a Number of Services to Member
  Banks
• Today the Fed Controls the Money Supply

8
Glass-Steagall Act 1933

• Passed During the Great Depression
• Separated Investment and Commercial Banking
• Created the FDIC as a temporary agency
• Fed Given the Power to Set Margin Requirements
• Prohibited Interest to be Paid on Checking
  Accounts

9
FDIC Act 1935

• Created the FDIC as a permanent agency
• Gave the FDIC the Power to Examine Banks and Take
  Necessary Action

10
Bank Holding Company Act of 1956

• Required Fed approval for creation of a bank
  holding company
• Prohibited bank holding companies from acquiring
  banks in other states

11
Social Responsibility Acts

• 1968 Full Information on Terms of Loans Must be
  Given
• 1974 Cannot Be Denied a Loan Based on Age, Sex,
  Race, National Origin or Religion
• 1977 Cannot Discriminate Based on the
  Neighborhood in Which Borrower Resides
• 1987 and 1991 Banks Must Disclose Full Terms on
  Deposit and Savings Accounts

12
Depository Institution Deregulation and Monetary
Control Act (DIDMCA) 1980

• First of Deregulation Acts
• Phased Out Interest Rate Ceilings
• Allowed Interest to be Paid on Checking Accounts
  (NOW Accounts)
• Raised deposit insurance ceiling to 100,000

13
Garn-St. Germain Act 1982

• Continued the Deregulation of DIDMCA
• Created Money Market Deposit Account
• FDIC Could Arrange Mergers Across State Lines if
  Needed
• Loan Limits were Liberalized
• Banks in Need of Capital Could Get It From the
  FDIC
• Anyone see problems with the last two laws???

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15
Competitive Equality in Banking Act 1987

• Allowed Creation of Special Bridge Banks for
  Failed Institutions
• Bridge Banks Are Special National Banks Operated
  by the FDIC
• Bridge Banks Created When Bank is Essential to
  the Community

16
Financial Institutions Reform, Recovery and
Enforcement Act (FIRREA) 1989

• Created in Response to Large Number of Bank and
  SL Failures
• Combined FDIC and FSLIC into the FDIC and
  Dismantled SL Regulatory Body
• Created the RTC to Take on the Assets of Failed
  SLs
• 50 Billion Authorized to Handle Failed
  Institutions (Later Increased)
• Allowed Bank Holding Companies to Purchase
  Savings Banks

17
FDIC Improvement Act 1991

• Move Towards Re-regulating the Industry
• Requires Regulators to Take Prompt Corrective
  Action When a Bank has Problems
• Prompt Corrective Action Based on the Capital
  Position of the Bank
• Requires Regulators to Develop New Standards for
  the Banks They Regulate

18
Riegle-Neal Acts 1994

• Bank Holding Company Can Acquire Banks Nationwide
• Consolidation of Interstate BHCs into Branches
• Smaller Well Managed Banks Only Examined Every 18
  Months
• Community Development Fund Created to Promote
  Development of Depressed Local Communities

19
Gramm-Leach-Bliley Act 1999

• Permits Banking-Insurance-Securities Affiliations
• Consumer Protections for Consumers Purchasing
  Insurance Through a Bank
• Must Disclose Policies Regarding the Sharing of
  Customers Private Information
• Customers are Allowed to Opt Out of Private
  Information Sharing
• Fees for ATM Use Must be Clearly Disclosed
• Federal Crime to Use Fraud or Deception to Steal
  Someones Account or Personal Information

20
The USA Patriot Act 2001

• Requires Banks and Financial Service Providers to
  Establish the Identity of their Customers
• Requires Banks and Financial Service Providers to
  Check the Customers ID Against
  Government-Supplied Lists of Possible Terrorists
  and Terrorist Organizations
• Report Suspicious Activity in Customers Account
  to the US Treasury

21
The SarbanesOxley Accounting Standards Act 2002

• Creates Panel to Promote Accurate and Objective
  Audits of Public Companies
• Top Corporate Officers Must Vouch for the
  Accuracy of their Companies Financial Statements

22
Fair and Accurate Credit Transactions (FACT) Act
2003

• Passed in Response to Increased Problem of
  Identity Theft
• Federal Trade Commission Must Make it Easier for
  Consumers Victimized to File Theft Report
• Individuals and Families are Entitled to One Free
  Credit Report Each Year

23
Check 21 2004

• Reduces the Need for Banks to Transport Paper
  Checks
• Can Provide a Customer with Substitute Check
  Which Contains Image of Front and Back of
  Original Check
• Allows for Electronic Transmission of
  Substitute Checks for Clearing of Checks

24
Federal Deposit Insurance Reform Act 2006

• First Significant Increase FDIC Coverage in 25
  years
• Raises FDIC Insurance Limits from 100,000 to
  250,000 for Certain Retirement Deposits
• FDIC and NCUA are Empowered to Adjust Deposit
  Insurance Limits Every 5 years for Inflation
• Merges Bank Insurance Fund and Savings
  Association Insurance Funds